How to Prove a Case for Owner Occupancy Destabilization

An owner may want to move into a rent-stabilized apartment in a building he owns for many reasons. He may desire a place to live in New York City; he may seek an apartment for a family member; he may want to expand the size of an apartment he already occupies in the building.

Fortunately, for these owners, one of the grounds specified in Section 2524.4 of the Rent Stabilization Code (RSC) for refusing to renew a lease, without an order of the DHCR, is that the owner seeks to recover the apartment “for such owner’s personal use and occupancy as his or her primary resident in the City of the New York and/or for the use and occupancy of a member of his or her immediate family as his or her primary residence in the City of New York.” This process is known as owner occupancy destabilization. The basic requirements for owner occupancy destabilization are:

• Only one of the individual owners of any building may recover possession of one or more apartments for personal use and occupancy;
• The owner must establish that he or a member of his “immediate family” intends to live in the rent-stabilized tenant’s apartment for at least three years; and
• He must prove that he’s acting in “good faith.”

If an owner meets these requirements he will establish his right not to renew the rent-stabilized tenant’s lease. The tenant may then be evicted, and the owner (or his family member) may move into the apartment.

Requirement #1: Not a Corporation or Partnership

To qualify for owner occupancy destabilization, the owner must not be a corporation or partnership. RSC Section 2524.4(a)(3) says that only an “individual owner” can bring a case based on owner occupancy. This means that the building must be owned by a natural person or persons (for example, a husband and wife), not by a partnership or corporation.

If you’re seeking owner occupancy and you currently own a building through a form of ownership that disqualifies you from bringing an owner occupancy case, you can change the form of ownership to individual ownership before you begin your efforts to recover the apartment. If you change your form of ownership to qualify for an owner occupancy case, take the following five steps to qualify for owner occupancy:

• Step #1: Make sure the deed reflects the change in the form of ownership.
• Step #2: Notify the tenants in writing of the change.
• Step #3: Make sure the new name can’t be confused with the old name. For example, if you and another person own the building as a partnership called XYZ Partnership and you convert to a tenancy in common, don’t call yourself XYZ Partnership. Instead, change your name to something entirely different.
• Step #4: File a “Report of Change in Identity of Owner/Agent” [RA-44 (1/12)] form with the DHCR.
• Step #5: If a partnership or corporation owned the building, and the building was its only asset, file a dissolution of partnership or corporation with the county clerk’s office in the county in which the partnership or corporation was organized.

Another consideration is that only one co-owner can seek an apartment for owner occupancy. In one case, an owner sought to evict a rent-stabilized tenant so that he could recover the apartment for his own use. The tenant asked the court to dismiss the case. He pointed out that a different co-owner previously sought and recovered another apartment in the building for owner occupancy. The owner argued that the RSC barred only two unrelated co-owners from trying to recover apartments at the same time.

The court ruled against the owner and dismissed the case. Rent Stabilization Law Section 26-511(c)(9)(b) states that the law “shall only permit one of the individual owners” of a building to recover possession of one or more dwelling units for owner occupancy. RSC Section 2524.4(a)(3) also states that only one individual owner can recover an apartment, however the owners jointly hold the property. According to the court, there was no statute or case law supporting the owner’s interpretation of the law [Begum v. Tapia, January 2010].

Requirement #2: Occupancy by Owner or Immediate Family

An owner must be able to show that he and/or a member of his immediate family will occupy the tenant’s apartment. An owner’s immediate family includes the “husband, wife, son, daughter, stepson, stepdaughter, father, mother, father-in-law, or mother-in-law.”

If, after recovering possession of the apartment, the owner doesn’t use the apartments as the owner’s or an immediate family member’s primary residence for three years, the owner may lose the right to any rent increases for other apartments in that building for three years [RSC §2524.4(a)(5)].

Requirement #3: Owner Acting in “Good Faith”

The law requires an owner to prove he’s acting in good faith. Good faith has been defined by New York’s highest court as the “honest intention and desire to gain possession of the premises for one’s own use.” In essence, the question of good faith is answered when a court decides whether it believes the owner’s statements. If it does believe the owner’s claim that he wants to use the apartment, it will find good faith.

The burden on an owner is to present as much evidence as possible to prove that he does, in fact, intend to occupy the tenant’s apartment.

Evidence of good faith. In each case, an owner will have to decide what evidence best supports his claim of acting in good faith. Suppose an owner has prepared architectural plans to renovate the tenant’s apartment once the owner occupies it; he will be demonstrating good faith, because he obviously has concrete plans to move in once the tenant vacates. Likewise, a planned move from a small apartment into a larger one to accommodate the owner’s growing family is likely to establish the existence of good faith.

In one case, the owner sued to evict five rent-stabilized tenants, claiming that he intended in good faith to occupy the tenants’ apartments as part of his primary residence in New York City. The court ruled for the owner after a trial. The tenants appealed and lost. The owner presented credible proof of his plan to use the fourth and fifth floors of the brownstone building as a combined duplex apartment. The building was close to the owner’s Manhattan office, and the owner’s current living situation in a cramped apartment didn’t allow his two sons to comfortably visit him. And the owner also had retained an architect and contractor to do the remodeling work and showed he had the means to pay for the planned construction [Brown v. Robards, October 2010].

Evidence of bad faith. On the other hand, you might show a bad faith intention if you advertise and try to sell your building after sending a tenant a lease nonrenewal notice. That’s what happened in one case. The owner advertised his building for sale and didn’t move into a similar apartment in the building that had been vacant three months before he sent the tenant the nonrenewal notice [Austin v. O’Brien, November 2011].

In another case, the owner claimed that she wanted to live closer to her aging parent and stepparent, and wanted to live in Manhattan because it was convenient for her law practice and her legally blind husband. The owner had made the same claim in a prior owner-use proceeding brought against another tenant in the same building. The prior case was dismissed on procedural grounds, and the owner and the other tenant later signed an agreement by which that tenant moved out. But the owner never moved into the other tenant’s apartment. The trial court’s finding that the owner didn’t have a good-faith intent to primarily reside in the tenant’s small fourth- and fifth-floor duplex walk-up apartment was supported by the record, particularly in light of the physical ailments of the owner and her husband [Riley v. Ansis, September 2010].

Applying for Destabilization

An owner can begin the destabilization procedure only when the tenant’s lease is about to expire. Instead of offering renewal as would normally be required, the owner notifies the tenant of his intention to occupy the tenant’s apartment. An owner cannot evict a tenant and destabilize his apartment so long as the tenant has a lease; only after the lease has expired can the tenant be evicted.

However, an owner must be careful not to wait until the tenant’s lease expires to decide he wants to take over the tenant’s apartment. You must send the tenant a nonrenewal notice between 90 and 120 days before the end of the tenant’s lease. If you don’t send this notice on time, the court will throw out your case. This will mean that you must give the tenant a renewal lease and wait until the end of that lease before trying again.

Also, the nonrenewal notice must state enough facts to establish the owner’s right to recover the apartment. If the court agrees with the tenant, it will throw out your case.

To avoid this problem, make sure to give plenty of information about why you need the apartment and who’s going to move in. In one case, the owner sued to evict two rent-stabilized tenants for owner-occupancy purposes. The owner planned to convert the entire 13-unit building into a single-family home for the primary residence of himself, his fiancée, and her two children. The owner described a plan to take back the two tenants’ apartments, without any plan to occupy them or begin renovating all apartments until much later, after the entire building was recovered. The tenants claimed that the plan was too vague. The court ruled for the tenants and dismissed the case.

The owner appealed and won. The owner’s nonrenewal notices described “recovery for personal use and occupancy” within the meaning of the RSC. Any questions concerning the feasibility of landlord’s proposed renovations or the ultimate question of landlord’s good-faith intention to occupy the tenants’ apartments or the building as a whole were to be addressed in pretrial questioning or at trial. And therefore, the owner was allowed to go forward with the eviction cases [Rudd v. Sharff, December 2010].

Once an owner refuses to renew the tenant’s lease, the owner occupancy destabilization procedure begins. No special application form need be filed. Instead, an owner simply waits until the tenant’s lease expires. If the tenant then moves out, the owner and/or his family can move in. But if the tenant doesn’t vacate voluntarily, the owner will have to go to court. There he will be required to prove that he has met the requirements. If the judge is satisfied with the proof, he’ll issue an order permitting the tenant to be evicted.

Additional Tenant Defenses Against Owner Occupancy

Special rules apply to senior citizens and disabled persons concerning eviction based on owner occupancy. An owner can’t evict a tenant from a rent-stabilized apartment in New York City if the tenant or the spouse of the tenant is a senior citizen, 62 years old or older, or a disabled person unless the owner provides an equivalent or superior apartment at the same or lower rent in a nearby area.

Also, an owner can’t evict a tenant from a rent-stabilized apartment outside New York City or a rent-controlled apartment statewide when a member of the household lawfully occupying the apartment is a senior citizen, 62 years old or older, or a disabled person, or has been a tenant in the building for 20 years or more.

In one case, a court ruled against the owner who attempted to evict, because she failed to offer the elderly tenant an alternate apartment that was an equivalent or superior nearby housing accommodation at the same or lower regulated rent, as required by RSC Section 2524.4(a)(2). The owner appealed and lost. The owner offered the tenant any number of unregulated market-rent apartments and assured the tenant that she would pay the tenant a stipend to cover the difference between the tenant’s current rent and the unregulated rent. However, although it may be hard to do so in the current real estate market, the code requires an owner to offer a rent-stabilized apartment, and it doesn’t matter what financial or tenancy terms the owner and tenant might agree to [Nestor v. Britt, February 2012].

In another instance, the owner sued to evict a rent-stabilized tenant to recover the apartment for use as a family member’s primary residence. On the eve of the trial, the tenant asked the court for permission to amend her answer. The tenant now claimed that she was disabled. If proved, she would be entitled to be relocated before the owner could recover the apartment. The owner argued that the tenant raised this claim too late and without sufficient proof. The court ruled for the tenant with certain conditions. The tenant had to give the owner authorizations for access to all medical records and interviews with her doctors, since she put her medical and psychological condition at issue and thereby waived any doctor-patient privilege [Tjia v. Schwartz, May 2011].