“No Eviction After Renter Didn’t Pay for 9 Years”

by Walter Olson on June 14, 2012

Since the Brooklyn loft space is out of compliance, the New York courts have decided, its owner is entitled neither to reclaim the space from its tenant nor to collect rent from her [NY Times and more via Kanner; ABA Journal]

{ 16 comments }

1 Val 06.14.12 at 9:20 am

I’m sort of meh on this.

I mean, she withheld rent because the landlord was in breach of state law, and if NY leases are anything like Boston lease in breach of contract as well. She even put an amount equal to the rent in an interest bearing account each month. If the management company hadn’t grossly breached it’s clear legal and contractual duty they wouldn’t be in this mess. Also, they had 9 years to come into compliance with their clear contractual obligation, so that they start complaining now long after the fact.

Long story short is that if they actually cared about this, they would have fixed the problems a decade ago, it sounds like the building wasn’t in compliance with really basic stuff like the fire code.

2 captnhal 06.14.12 at 9:55 am

If I were a tenant on a small budget I’d rather live in a loft rent free than anywhere else and hope it never comes into compliance.

3 Robert 06.14.12 at 10:46 am

And, of course, the squatter doesn’t have to pay income tax on the amount of “free rent” he’s getting.

(According to a Bloomberg article, there was nearly $100,000,000 of “squatters rent” in 2011. This is the term they use for the rent-free living deadbeat mortgage holders enjoy. Since the start of the housing collapse, nearly a trillion dollars TAX FREE has been given to the “99%” in the form of free rent. And what do they do? They whine about the “rich” not paying taxes.)

4 Robert 06.14.12 at 10:46 am

Sorry that’s $100 BILLION not Million for 2011

5 Allan 06.14.12 at 10:55 am

No sympathy for the landlord. Once it decided not to put the place into compliance, it had two choices, keep the apartment empty or let someone live in for free.

Comply with the law, landlord, and then you can boot the tenant or make her pay.

6 td 06.14.12 at 12:00 pm

If it is not in compliance then there shouldn’t be anyone living in there thus the tenant must be forced to go.

7 Hugo S. Cunningham 06.14.12 at 12:18 pm

@Allan–

Would your answer be the same if the tenant, recognizing a dirt-cheap opportunity, had promised not to complain about code compliance in exchange for cheap rent?

That would make both tenant and landlord richer, than keeping the loft empty.

Admittedly, a landlord should not allow a tenant to accept *genuine* dangers, eg fire hazards. But even there, the appropriate remedy is to evict the tenant from an unsafe loft and fine the landlord.

8 DEM 06.14.12 at 1:04 pm

The tenant knew the loft was not in compliance and lived there anyway, quite voluntarily. So she accepted the risks in return for rent-free housing. Yes, she claims to have escrowed all of the unpaid rent, but still, she knew there was some chance she’d never have to pay it. I think many people, if given the option, would gladly accept some level of legal non-compliance in an apartment for a steeply reduced rent, to say nothing of a multi-year rent-free lease.

Surely the landlord here is not the most sympathetic plaintiff, but the tenant has just as surely received quite a windfall.

9 another guy named Dan 06.14.12 at 1:50 pm

This seems to me to be similar to the infamous “tuck rule” in the NFL: A good ruling based on a bad rule.

The tenant seems to be playing both sides of the street here in that she claims that the loft is too dangerous to be worth renting but safe enough to live in for nine years. It seems to me that there should be some period of repose after which the tenant has to be considered to have accepted conditions having made no apparent good faith effort to find another dwelling elsewhere.

If it is true that the building is uninhabitable after nine years, shouldn’t the city condemn the property and relocate the tenants? Perhaps at the landlord’s expense?

10 Ron Miller 06.14.12 at 3:25 pm

The tenant is probably a bad seed who got an unjust enrichment but my goodness the landlord slept on his rights. In a perfect world, they would both lose.

11 OBQuiet 06.14.12 at 10:52 pm

I followed the second link and it looks like the tenants are gaming the system:

Chazon’s lawyer, David Berger, said that legalizing the building had taken so long in part because all improvements required tenants’ approval. He said tenants nitpicked on aesthetic issues that had nothing to do with safety.

“If it wasn’t safe, they wouldn’t be living there,” he said. He said that a system including tenants in the process that ultimately decided how the building was legalized, who did not have to pay rent until it was legalized, meant “you’re handing the building to the tenants.”

12 Agammamon 06.15.12 at 10:16 am

Here’s what I don’t get about this –

I can understand that the landlord wouldn’t get back rent, even though the tenant obvioulsly considered the apartment suitable,he’s in breach of the law.
But if its so important for these mods to be made to the apartment, as the NY Times article points out this is not just to make the place nicer but for “fire and safety”, isn’t it unsafe for the tenant to remain?
Shouldn’t the apartment be declared uninhabitable until brought up to code and the tenant removed to look for a “safe” place to live?

13 Don 06.15.12 at 11:04 am

The tenant is probably a bad seed who got an unjust enrichment but my goodness the landlord slept on his rights. In a perfect world, they would both lose.

Why would you say unjust enrichment? The tenant kept the money in escrow. So, she already paid income tax on it.

And the State Law of New York says that the Landlord was out of compliance with the law and as a result can not charge rent on the building. I would argue that any landlord who is illegally collecting rent on an out of compliance building is the one receiving unjust enrichment.

14 Allan 06.15.12 at 12:27 pm

Generally speaking, the landlord should not get the benefit of the rent, no matter how much. The landlord knew that it was getting a variance to let the tenants live there and that the tenants had a veto over changes. Consequently, they knew there was a chance that tenants would not pay their rent.

We are not dealing with misinformed landlords here. If they wanted to minimize the risk, they could have, by making all improvements before tenants moved in. They assumed the risk, so I have no problem.

On the other hand, the law is a bit draconian. Perhaps it should read that the tenant does not have to pay the rent in a non-conforming rental only if the tenant does not prevent the landlord from making the property conforming…

15 Melvin H. 06.16.12 at 10:27 am

At the same time, given how long it takes just to GET any kind of eviction legally enforced (seemingly no matter where one is in the U.S.)… Just look how long this case has run, nearly four full years from the filing in 2008.
Also, how is the landlord getting “unjust enrichment”? The tenant, while paying into escrow, may get the $60,000 + any interest back out of this, if I understand this right; the landlord is out the nine year’s rent (now, who paid the utilities in this wasn’t told), plus he still has to somehow bring the loft up to code–with the tenant still living there. How does the landlord solve that problem?

16 Allan 06.19.12 at 1:15 pm

Melvin,

The landlord got himself into the problem. I don’t know how he will solve it. Perhaps he could make all the improvements the tenant wants and then (if permitted) raise the rent to reflect the value of the upgraded apartment.

If this is a rent-controlled apartment, I don’t know wha the landlord can do.

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