448 452 57 LLC v. Jeffrey Sposaro, Respondent-Tenant-Respondent, and "John Doe" and "Jane Doe", Respondents-Undertenants. (2026)

Per Curiam.

Final judgment (Jack Stoller, J.) entered on or about October 10, 2024, reversed, without costs, and a new trial ordered. Appeal from order (Jack Stoller, J.), dated November 6, 2024, dismissed, without costs, as academic.

The primary issue at trial of this lease-expiration holdover proceeding was whether the subject premises was properly deregulated "due to a high rent vacancy" that occurred prior to tenant's occupancy in 2008. At trial, the stipulated evidence showed: (1) the apartment was first registered with DHCR as rent controlled in 1984; (2) the rent-controlled tenant vacated in April 2004; (3) landlord entered into a free market lease with the then-tenant in May 2004 at a monthly rent of $3,450.00; (4) landlord continued to register the apartment as rent controlled from 1985 through 2004; (5) in 2019, landlord filed an "Owner's Report of Vacancy Decontrol for a New York City Apartment Subject to Rent Control" indicating that the rent- controlled tenant vacated and the first tenant took occupancy on May 7, 2004 with a monthly rent of $3,450.00.

Based upon these facts, the trial court dismissed the petition, concluding that since landlord "never registered with DHCR any tenant or rent subsequent to the Rent-Controlled Tenant . . . it cannot establish that the rent charged was the kind of 'legal regulated rent' that would exceed $2,000 and thus operate to deregulate the premises." Upon landlord's appeal, we reverse and order a new trial.

While it is "notable" that the first tenant's rent was not registered with the DHCR, it is not determinative as a matter of law as to whether the apartment was properly deregulated (Malkiewicz v Acquisition Am. XI LLC, 233 AD3d 587, 588 [2024]; Jacin Invs. Corp., N.V. v Von Vogt, 87 Misc 3d 130[A], 2025 NY Slip Op 51649[U] [App Term, 1st Dept 2025]; see also Cvek 446 E. 88th Street LLC v Fish, 67 Misc 3d 137[A], 2020 NY Slip Op 50602[U] [App Term, 1st Dept 2020] [apartment properly deregulated even though landlord mistakenly registered the apartment as stabilized]). Coverage under rent regulation is a matter of statutory right and cannot be created by waiver or estoppel (see 546 W. 156th St. HDFC v Smalls, 43 AD3d 7, 11 [2007]; Ruiz v Chwatt Assoc., 247 AD2d 308 [1998]; 57 NY Jur. 2d, Estoppel, Ratification, and Waiver § 5 ["Equitable estoppel cannot be applied to create a right that does not already exist but merely prevents the denial of a right that is claimed to have arisen otherwise"]). Thus, the petition should not have been dismissed on the grounds relied upon by Civil Court.

Since the trial court did not make a determination as to whether the purported high rent deregulation of the apartment in 2004 was "legal and legitimate" (see Malkiewicz v Acquisition Am. XI LLC., 233 AD3d at 588; see also Thurman v Sullivan Props. L.P., 226 AD3d 453 [2024]), we remand for a new trial.

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.

I concur I concur I concur

Decision Date: October 7, 2026