WEST SIDE MARQUIS LLC v. TROY SHEPPARD (2026)

Morningside Heights Legal Services, Inc., New York (Dannis Fan of counsel), for appellant.

Rosenberg & Estis, P.C., New York (Ethan R. Cohen of counsel), for respondent.

Order, Supreme Court, New York County (Lori S. Sattler, J.), entered on or about September 10, 2025, which granted plaintiff-landlord's motion for summary judgment on its claim for a declaratory judgment that defendant-tenant is required to pay the legal regulated rent for the subject apartment and denied tenant's cross-motion for summary judgment declaring that he is entitled to a renewal lease with the preferential rent that was paid by the deceased tenant of record, unanimously reversed, on the law, without costs, plaintiff's motion denied, defendant's cross-motion granted, and it is declared that defendant is entitled to a renewal lease with rent based on the preferential rent set forth in the predecessor lease, and the complaint is dismissed.  The Clerk is directed to enter judgment accordingly.

Under the Housing Stability and Tenant Protection Act of 2019 (HSTPA) (L 2019, ch 36), a landlord may not withdraw a previously offered preferential rent in a renewal lease, even if properly preserved in the prior lease (see Matter of West Side Marquis LLC v Maldonado, 246 AD3d 642, 644 [1st Dept 2026] ).  The restriction stated in Maldonado, which involved a different tenant's succession rights in this same building at issue here, is dispositive.  Because the HSTPA applies to defendant's succession rights, he was entitled to a renewal lease at the preferential rent paid under the prior lease signed by his grandmother (id. at 645;  Rent Stabilization Law [Administrative Code of City of NY] § 26–511[c][14] ).

Plaintiff offers no argument warranting a different result.  As we found in Maldonado, deviating from the preferential rent is not permissible because neither the 2006 settlement agreement signed by defendant's grandmother nor the 2006 rent order issued by the New York State Division of Homes and Community Renewal (DHCR) “fall[s] within the category of ‘any other increases authorized by law’ under Rent Stabilization Law § 26–511 (c)(14)” (246 AD3d at 645, citing Board of Educ. of Union Free School Dist. No. 6 v Town of Greenburgh, 277 N.Y.193, 195 [1933], which held that “[e]xpressions such as ‘required by law,’ ‘regulated by law,’ ‘allowed by law,’ ‘made by law,’ ‘limited by law,’ ‘as prescribed by law,’ ‘created by law’ and ‘a law of the state,’ as used in the statutes refer exclusively to the statute law of the State”).  This is particularly so here because although the DHCR order authorized the resolution of the parties' claims under the 2006 stipulation, the order states that it otherwise “has no precedential effect on any other application nor establishes any policy” of DHCR.

Defendant correctly notes that in Maldonado this Court held that the “application of the HSTPA to the instant action does not result in an impermissible retroactive effect because the renewal lease offer was made after the HSTPA came into effect in June 2019” (246 AD3d at 645).  Defendant aptly analogizes to Matter of 160 E. 84th St. Assoc.  LLC v New York State Div. of Hous. and Community Renewal (43 NY3d 275, 285 [2024] ), in which the Court of Appeals found that DHCR orders subjecting apartments to high rent deregulation upon the expiration of the affected leases could not be enforced if the lease expired after the HSTPA repealed high rent deregulation.  Here, too, the provisions of the 2006 stipulation permitting plaintiff to charge the legal regulated rent rather than the preferential rent under certain renewal leases, though consistent with the rent stabilization laws at the time, are no longer enforceable under the HSTPA (id.).

We reject plaintiff's contention that the DHCR order has preclusive effect as against defendant.  As we found in Maldonado, the DHCR order “does not have preclusive effect pursuant to the doctrines of administrative finality, res judicata or collateral estoppel because it was issued in a proceeding to reset the legal regulated rent, not one determining whether the landlord can disregard the ACR notwithstanding the HSTPA” (246 AD3d at 646).  Additionally, as plaintiff acknowledged to the motion court, defendant was not involved in the 2006 DHCR proceeding or the resulting settlement agreement, “meaning he did not have a full and fair opportunity to litigate in the prior proceeding” (id.).

We have considered plaintiff's remaining contentions and find them unavailing.