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Rent Stabilization is Not a Status That You and Your Landlord Can Just Contract Out of for Your Mutual Profit

Oct 28, 2018

Tenant Question:

I am subletting my Rent Stabilized apartment and I am overcharging my subtenant – I know it and my landlord knows it. My rent is close to the deregulation threshold amount. My landlord and I talked about it. I asked her if she will let me keep the apartment and continue to let me sublet it, if in exchange I let her raise my rent to the deregulation threshold and deregulate the apartment. Then, I will no longer be overcharging the subtenant because the unit will no longer be Rent Stabilized. I will still make a profit on the sub-rent even if the rent is raised to the threshold. The landlord liked this idea, but said that her lawyer told her this is not legal. What say you?

TLP Instructor Michelle’s Answer:

Of course, you may not…not not not… do that. I don’t even know where to start on this one. But let’s just keep it simple.

Rent Stabilization is not a status that you and your landlord can just contract out of for your mutual benefit. Rent Stabilization Code § 2520.13 (“An agreement by the tenant to waive the benefit of any provision of the RSL or this Code is void…”); Thornton v. Baron, 5 N.Y.3d 175 (2005) (“A lease provision purporting to exempt an apartment from rent regulation in exchange for an agreement not to use the apartment as a primary residence is against public policy and void.”); Drucker v. Mauro, 30 A.D.3d 37 (1st Dept 2006) (“It is well settled that the parties to a lease governing a rent-stabilized apartment cannot, by agreement, incorporate terms that compromise the integrity and enforcement of the Rent Stabilization Law. Any lease provision that subverts a protection afforded by the rent stabilization scheme is not merely voidable, but void …”); Draper v. Georgia Props., 94 N.Y.2d 809  (1999).

In any event (as if I need to say more), I cannot tell from your question whether you are still living in the apartment. If you really are subletting the apartment (meaning you are no longer living there) and you only want to hold on to the unit for the profit-margin on the sub-rent, then you are functioning as an absentee middleman for this apartment, and your sub-tenant is probably actually the real Rent Stabilized tenant of the apartment, and you are an illusory prime-tenant. Conason v. Megan Holding, LLC, 25 N.Y.3d 1 (2015). Not to mention that you can be held liable for the overcharge of your sub-tenant. Rent Stabilization Code § 2525.7 states:

“The rental amount that a tenant may charge [an occupant] shall not exceed such occupant’s proportionate share of the legal regulated rent charged to and paid by the tenant for the subject housing accommodation…The charging of a rental amount to an occupant that exceeds that occupant’s proportionate share shall be deemed to constitute a violation of this Code.”

It just does not work that way. Your Rent Stabilized status is not a commodity that you can bargain with; it is a legal status that you happen to be lucky enough to be subject to.

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 you and me or between you and the Tenant Learning Platform.