September 19, 2016: This Q&A post originally appeared on the LandlordsNY blog, where Michelle Maratto Itkowitz is the "Legal Expert".
Hi, Michelle here. I am the LandlordsNY “Legal Expert” (you can see my profile on the expert’s page). My goal is to post in the blog all of the questions I get from LandlordsNY members (keeping the member anonymous) and my answers thereto, when I think that such questions and answers would be of interest to other people. Let me know if this is helpful. These questions are excellent, keep them coming.
Question: “We started a simple licensee proceeding to remove a roommate who wasn't on the lease. Her lawyer [answered] that the prime tenant was illusory. What I am trying to figure out is what is the difference between sublet and illusory tenancy? Is there a time frame how long someone needs to be in an apartment to be considered an illusory tenancy?”
So your question is – How does a court decide if a tenant is real and the occupant is a subtenant, as opposed to the tenant being “Illusory” and the alleged subtenant really being the prime tenant?
The practice of "subleasing" or "licensing" a rent-stabilized apartment, in the absence of an actual tenant, has been dubbed an "illusory tenancy”. In such cases, subtenants have successfully asserted entitlement to Rent Stabilized tenancies on their own behalf. Perlbinder v. New York City Conciliation and Appeals Bd., 67 N.Y.2d 697 (1986); Yellon v. Reiner-Kaiser Associates, 89 A.D.2d 561 (2d Dep't 1982) (When an illusory tenancy has been found, “‘subtenants’ have been accorded the full rights of tenants under the Rent Stabilization Law and Code[.]”)
So now, let us look at some examples.
In Linden Lefferts LLC v. Cox, 2011 NY Slip Op 21093, 2011 WL 903049 (AT 2nd 3/14/11; LVT Number: #23315, Landlord sued to evict Rent Stabilized tenants for illegal subletting. Tenants appeared in court and agreed to move out. A subtenant also appeared and agreed to move out. Later, another occupant stepped forward and asked the court to vacate the judgment and warrant and let him join in the case. He claimed illusory tenancy, and said that he had lived in the apartment for five years and that both landlord and prior landlord had accepted rent from him. He wanted the chance to put in an answer. The court ruled against the occupant. He appealed, and the appeals court reopened the case. The occupant was at least entitled to raise his claim by putting in an answer to landlord's petition.
In Square Block Associates v. Fernandez, NYLJ, 12/3/10, p. 26, col. 2 (AT 1st) LVT Number: #23083, Landlord sued to evict Rent Stabilized tenant for unauthorized subletting. Subtenant claimed that tenant was illusory and that he was therefore entitled to a lease in his own name. The court ruled against subtenant, who appealed and lost. At trial, landlord proved that subtenant participated with tenant, his former roommate and long-time friend, in a scheme to prevent landlord from finding out that tenant had moved out. After tenant vacated, subtenant continued to pay rent with money orders made out in tenant's name, and tenant continued to sign renewal leases. Also, there was no profiteering since tenant collected no rent from subtenant. At most, tenant may have held on to the lease while hoping that the building might someday convert to cooperative ownership. There was no illusory tenancy.
In 333 East 49th Partners LP v. Siebert, NYLJ, 8/8/07, p. 29, col. 1 (Civ. Ct. NY) LVT Number: #19820, a factor the court considered when holding for tenant was that, although landlord didn't conspire with tenant in the unauthorized subletting, landlord knew, or should have known through its building employees, that subtenant was living in the apartment for a long time before taking any action.
In 545 Eighth Ave. Assocs. LP v. Shanaman, NYLJ, 6/9/06, p. 35, col. 1 (AT 1st) LVT Number: 19848, the court found that the tenant was illusory where tenant had moved out more than 10 years earlier.
Some Factors Courts Consider When Analyzing An Illusory Tenancy Allegation
(1) Is tenant really gone? If so, for how long? If so, is she returning?
(2) Did landlord accept rent directly from the subtenant?
(3) Did subtenant participate with tenant in a scheme to prevent landlord from finding out that tenant had moved out? i.e. paying rent with money orders made out in tenant's name, and tenant continuing to sign renewal leases.
(4) Did tenant profiteering on subtenant?
(5) Was there was a connection between landlord and tenant? Such as relatives. Did tenant actually pay rent to landlord?
(6) Did landlord know subtenant was there alone and fail to take action? For how long?
Thank you for this question. Finally, I am obligated to say that this answer is for general informational purposes only, does not constitute legal advice, and does not create an attorney and client relationship between us or between you and LandlordsNY.
Let me know if you need anything else.
Michelle Maratto Itkowitz
26 Broadway, 21st Floor
New York, New York 10004