How to Tell If Tenant Has Corrected Illegal Sublet

Before you sue to evict a tenant for illegally subletting an apartment, you must send the tenant a legal document called a “notice to cure,” which gives the tenant a chance to correct the illegal sublet. If you end up in court on your illegal sublet claim and win, the court will usually give the tenant another chance to correct the illegal sublet before it orders the tenant’s eviction.

In some illegal sublet claims involving short-term rentals through Airbnb, however, judges have ruled that profiteering tenants are unable to cure the illegal sublet. For example, in one case, an owner sought an eviction against a rent-stabilized tenant, claiming that the tenant’s rent-stabilized lease was validly terminated due to her subletting and profiteering. The court ruled that the tenant engaged in substantial profiteering, and there was no proof that owner knew about or consented to the tenant’s activity. The tenant had sublet her apartment to 93 different customers recruited through the Airbnb website for 338 days over 18 months. And the tenant charged $95 - $120 per night while her rent equaled $58 per night [Goldstein v. Lipetz, May 2017].

In another case, an owner showed that a rent-stabilized tenant listed the apartment on the Airbnb website at a nightly rate starting at $215 plus other charges; provided linens, towels, wifi, TV, and housekeeping service; had rented the apartment at least 120 nights in a 14-month period, with groups as large as seven adults staying up to 10 days and paying $375 per night; and had reported Airbnb rental income on tax returns for 2009 and 2010 while deducting apartment expenses against that income. The court found that the tenant’s conduct constituted subletting, profiteering, and commercialization of the premises and that this was an incurable violation of the Rent Stabilization Law [335-7 LLC v. Steele, November 2016].

Since courts usually give tenants an opportunity to cure in a typical illegal sublet case, it’s important to know exactly what the tenant must do to correct an illegal sublet. Then you’ll know whether to go ahead with your illegal sublet case or, if you’ve already won an illegal sublet claim, whether to ask the court to order the tenant’s eviction.

Deciding whether the tenant has corrected the illegal sublet isn’t as easy as it seems. In most illegal sublet cases, the tenant has moved out of the apartment and the current occupant is the person to whom it was illegally sublet. But to correct the illegal sublet, is it enough for the illegal subtenant to move out, even if the tenant doesn’t move back in? What if the illegal subtenant remains in the apartment but the tenant moves back in? We’ll review various situations and give you some guidance to help you decide if the tenant has corrected the illegal sublet.

Situation #1: Subtenant Moves Out, Tenant Doesn’t Move Back In

If you’ve already started your illegal sublet case, courts have differed as to whether it’s enough for the illegal subtenant to move out if the tenant doesn’t move back in. The following is a ruling where the court said that it’s enough for the illegal subtenant to move out.

In that case, an owner sued to evict the rent-stabilized tenant for illegally subletting his apartment without getting the owner’s consent. The tenant asked the court to dismiss the case. The subtenant submitted a sworn statement that she had moved out of the apartment and removed all of her belongings, and had no intention of returning. The owner claimed that the tenant hadn’t corrected the sublet because he still lived in Michigan. The court ruled that since the subtenant had moved out, the tenant had corrected any illegal sublet. Whether the tenant still lived in Michigan was a question of primary residence, which wasn’t the issue raised in this case. The only issue the court could rule on here was illegal subletting [Renwick Realty v. Molina, November 2002].

But we also found a case in which the court ruled that if the tenant who doesn’t move back in is a nonprimary resident, the tenant shouldn’t even get a chance to correct the illegal sublet. The owner in that case sued to evict a tenant for illegally subletting an apartment to her daughter and son-in-law. The owner claimed that the tenant had never used the apartment as a primary residence and so shouldn’t be allowed to correct the illegal sublet. The court agreed and ruled that the owner could evict the tenant [Metropolitan Life Ins. Co. v. Altstaedter, October 2001].

What should you do? This depends on whether or not you’ve started your illegal sublet case.

If case not started. If the illegal subtenant moves out after you send the notice to cure but before you start the case, and the tenant hasn’t moved back into the apartment, consider hiring a private investigator and/or an attorney to see if you have enough evidence to evict the tenant for nonprimary residence. You’ll have to wait for the tenant’s lease to end before you can start your case.

If case started. Speak to your attorney about whether it pays to argue to the court that the tenant hasn’t moved back to the apartment because he’s a nonprimary resident. Your attorney can then argue that the tenant isn’t entitled to correct the illegal sublet and must be evicted.

Situation #2: Subtenant Stays, Tenant Moves Back In

If the subtenant stays in the apartment and the tenant moves back in, that’s enough for the tenant to correct the illegal sublet. But you should take a closer look at the situation because you may be able to evict the tenant for other reasons.

For example, if the subtenant is living in the apartment with unrelated roommates, and the tenant moves back in, the tenant may be violating a lease clause limiting the number of roommates she may have. You may be able to evict her for that. Or if the apartment is rent-stabilized and the tenant is charging the former subtenant (now a roommate) an illegal rent overcharge, you may be able to evict the tenant for this reason.

Also, instead of pursuing the eviction, you may be willing to settle for a rent increase. You can consider offering to add the subtenant’s name to the lease so you can collect a vacancy increase.

Situation #3: Subtenant Doesn’t Move Out, Tenant Doesn’t Move Back In

In this situation, the tenant hasn’t corrected the sublet. For example, one owner won an illegal sublet case against a tenant after proving that the tenant had moved to Florida and allowed her adult daughter to move into the apartment with the daughter’s family. Although the tenant was given the chance to correct the illegal sublet, an appeals court ruled that she hadn’t done so and could be evicted. The tenant’s testimony that she had moved back to the apartment and was living there with her daughter and her daughter’s family wasn’t believable [Presbyterian Hosp. of the City of New York v. Melendez, November 2001].

In another case, a court ruled an owner could evict a rent-stabilized tenant for unauthorized subletting. The owner proved that the tenant no longer lived in the apartment, but had purchased a condo unit and had sublet the apartment to an occupant without the owner’s consent. The tenant’s son also appeared in court and claimed succession rights but presented no proof that he had lived in the apartment with the tenant for at least two years before she moved out [Westchester Plaza Holdings, LLC v. Norwood. August 2017].

Situation #4: Tenant Doesn’t Comply with Settlement Agreement

What if you end up settling an illegal subletting claim with the tenant? If so, the tenant must comply with the terms of the settlement agreement. If the tenant doesn’t, you can ask the court to throw out the agreement and allow you to evict the tenant. That means if your agreement says that the tenant must move back into the apartment, the tenant must move back in whether or not the illegal subtenant moves out.

For example, in one case the rent-stabilized tenant agreed to move back into the apartment by a certain date. The owner later asked the court to throw out the settlement agreement and permit eviction because the tenant hadn’t complied with the agreement. An appeals court allowed the owner to evict the tenant. The tenant hadn’t moved back into the apartment. Instead, after signing the settlement agreement, the tenant rented the apartment to another illegal subtenant [Beaux Arts Realty II LLC v. Council, December 2001].

In another case, the tenant signed a settlement agreement that said she would remove the illegal subtenant by a specified date. The agreement also said that the court would issue a judgment in the owner’s favor, with the eviction warrant delayed to give the tenant time to comply with the agreement. When the subtenant didn’t move out, the tenant asked the court to throw out the judgment and eviction warrant. Both the housing court and an appeals court refused to do so. The tenant didn’t comply with the agreement, and there was no reason to throw out the judgment or eviction warrant [1430 Seagirt Blvd. Corp. v. Gerber, March 2000].