What to Do if Second Family Member to Get Pass-on Rights Won't Pay Rent Hike

For rent-stabilized and rent-controlled apartments, a “family member” of the tenant may have the right to a rent-stabilized renewal lease or protection from eviction in an apartment under rent control when the tenant dies or permanently leaves the apartment.

A family member has the right to a renewal lease or protection from eviction if he or she resided with the tenant as a primary resident in the apartment for two years immediately prior to the death of the tenant or his or her permanent departure from the apartment. The family member may also have the right to a renewal lease or protection from eviction if she resided with the tenant from the inception of the tenancy or from the commencement of the relationship.

If the family member trying to establish succession rights is a senior citizen or disabled person, then the minimum period of co-occupancy is reduced to one year.

The first family member to establish succession rights on or after June 20, 1997, is not required to pay the owner a vacancy increase. However, Section 2522.8 of the Rent Stabilization Code allows you to collect a vacancy rent increase from the second successive family member of a rent-stabilized or rent-controlled tenant to take over an apartment after the tenant dies or moves out.

The vacancy increase for the second successor also applies to apartments subject to rent control. Once the vacancy increase is applied to this second successor family member, a subsequent succession situation is again created.

For example, Tenant A dies and the apartment is passed on to her daughter, Tenant B. Tenant B then moves out and the apartment is passed on to her son, Tenant C. Tenant C then moves out and the apartment is passed on to his sister, Tenant D. Tenant D then moves out and the apartment is passed on to her daughter, Tenant E.

You can collect a vacancy rent increase when you rent the apartment to Tenant C (the second successive family member to get pass-on rights after Tenant A moved out) and Tenant E (the second successive family member to get pass-on rights after Tenant C moved out). You can’t collect the vacancy rent increase when you rent the apartment to Tenant B or Tenant D.

But a second successive pass-on tenant may question your right to collect the vacancy increase and refuse to pay it. For example, the tenant may claim that he’s not the second successive family member to take over the apartment.

You can try resolving this issue by meeting with the pass-on tenant and explaining why you’re entitled to the vacancy increase. But, if you can’t convince the pass-on tenant that you have the right to collect a vacancy increase, you’ll have to take action. Here are two options you can consider.

Option #1: Get DHCR to Set Rent

Ask the DHCR to set the apartment’s legal regulated rent pursuant to Code Section 2522.6. That code section allows the DHCR to set the rent if the legal regulated rent is in dispute.

There’s no special request form you must use. Simply send a letter to the DHCR. Say that you’re asking the DHCR to “make an administrative determination” as to the legal regulated rent of the apartment pursuant to Section 2522.6 of the Rent Stabilization Code because there’s a dispute as to what the rent should be. You should highlight or underline this part in the opening paragraph of your letter.

Along with your full name, the tenant’s full name, and the full address of the apartment in question, explain that the tenant is the second successive family member to get pass-on rights to the apartment, but that the tenant has refused to pay a vacancy increase. Give all the relevant facts about the original tenant and the first pass-on tenant, including the dates of the leases with the original tenant and the first pass-on tenant. Then ask the DHCR to issue an order ruling that you’re entitled to collect the vacancy increase from the second successive pass-on tenant.

With your application, include proof that this is, in fact, the second successive family member to get pass-on rights. For example, include copies of the leases you signed with the original tenant and the first pass-on tenant.

Also, make sure that your letter is signed and notarized as it will serve as an affidavit. You can address your request letter to the attention of: Director, Multi-Service Unit; Property Management Bureau; 92-31 Union Hall Street; Jamaica, NY 11433.

Option #2: Sue to Evict Pass-on Tenant

If instead, you go to housing court, the type of case you bring will depend on whether the pass-on tenant has signed the renewal lease.

If pass-on tenant hasn’t signed renewal lease. If the pass-on tenant has refused to sign the renewal lease you offered, because it included the vacancy increase, you have two choices. You can sue to evict the pass-on tenant for not signing the renewal lease. The pass-on tenant will most likely defend himself by claiming that the renewal lease you offered contained an improper rent. It will then be up to the housing court judge to decide if that rent properly included a vacancy lease. If the judge rules in your favor, it will order the tenant to either sign the renewal lease with the increased rent or be evicted.

Your other choice is to sue the pass-on tenant for nonpayment of rent. Even thought the tenant hasn’t signed the renewal lease, Section 2523.5(c)(2) of the code says that if a tenant who hasn’t signed a renewal lease that you’ve offered remains in the apartment, you can collect the appropriate rent increases for a rent-stabilized apartment as if the tenant had signed a written lease. So you can argue in court that the tenant hasn’t paid the legal rent due under this “deemed” renewal lease.

If pass-on tenant has signed the renewal lease. The pass-on tenant may sign the renewal lease that includes the vacancy increase, but then refuse to pay the vacancy increase. In this case, you can sue to evict the tenant for nonpayment of rent.

Which Option?

Should you go to the DHCR or to housing court? Both options have their pros and cons. With its lack of filing fees, applying to the DHCR will be less costly than going to housing court. But applying to the DHCR does have its downside. The DHCR may take a long time to reach a decision and, during this time, the tenant won’t be paying the higher rent. So, even if the DHCR rules in your favor, the tenant will owe you a lot of back rent. If the tenant refuses to pay it, you’ll have to sue the tenant for it.

Suing to evict the tenant in housing court should take less time. And, if you win and the pass-on tenant doesn’t sign the renewal lease or pay the increased amount, you can evict him. But going to housing court also has its downsides. If you use an attorney, your fees will be higher than if you’d gone to the DHCR. And the tenant can raise various issues in defense in a nonpayment case, including claiming that you’ve breached the warranty of habitability by not making certain repairs in the apartment. These defenses can end up complicating the issue of your right to collect the vacancy increase. Also, if you lose in housing court, you may have to pay the tenant’s attorney’s fees.