Will a landlord who has not obtained a residential certificate of occupancy in accordance with New York Multiple Dwelling Law § 302 be successful in an action in ejection against a tenant for unpaid rent? In Chazon, L.L.C. v. Maugenest, 2012 NY Slip Op 04373 (N.Y. June 7, 2012), the New York Court of Appeals answered this question in the negative.

In that case, Plaintiff, the owner of a loft building in Brooklyn, brought an action in ejection seeking to evict its tenant (“Defendant”) for unpaid rent.  Defendant had not paid rent since 2003.

Until the state legislature enacted the Multiple Dwelling Law Article 7-C (“Loft Law”) in 1982, it was illegal to occupy lofts for residential purposes.  Lofts were formerly used only for commercial purposes and were unsuitable for residential use.  Before the enactment of the Loft Law, residential tenants had no legal right to occupy the space and landlords were not legally justified in collecting rent.  However, pursuant to the Loft Law, landlords were given certain guidelines to follow in order to be in accordance with the law.

Section 284 of the law established a “series of deadlines by which the owners of interim multiple dwellings are required to alter them to conform to safety and fire protection standards, ultimately doing everything necessary to obtain a residential certificate of occupany.” See id. at 2.

In Chazon, the Court of Appeals held that the Plaintiff was not “entitled either to collect rent or to evict the tenant” because Plaintiff had not obtained a residential certificate of occupancy.  Id.  Pursuant to the Loft Law § 301 (1), multiple dwellings cannot be occupied in whole or in part until a residential certificate of occupancy has been obtained.  The Loft Law defined “interim multiple dwelling” as any of these illegally occupied buildings.  See Multiple Dwelling Law § 281.  As such, the Court of Appeals agreed that “no rent shall be recovered by the owner of such premises . . . and no action or special proceeding shall be maintained therefor, or for possession of said premises for nonpayment of such rent” until the certificate has been obtained. Multiple Dwelling Law § 302 (1); see id.

Ultimately, the Court of Appeals left Plaintiff and Defendant in the same predicament they were in before commencement of the suit. It temporarily protected the Defendant from eviction.  It held that, u ntil Plaintiff complied with the residential certificate of occupancy requirement, Defendant would be allowed to continue living rent free.  The Defendant’s complaint was dismissed.

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