Gratz v. Century Apartment Associates

143 Misc. 2d 423, 540 N.Y.S.2d 940, 1989 N.Y. Misc. LEXIS 224
CourtNew York Supreme Court
DecidedApril 14, 1989
StatusPublished

This text of 143 Misc. 2d 423 (Gratz v. Century Apartment Associates) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gratz v. Century Apartment Associates, 143 Misc. 2d 423, 540 N.Y.S.2d 940, 1989 N.Y. Misc. LEXIS 224 (N.Y. Super. Ct. 1989).

Opinion

OPINION OF THE COURT

David B. Saxe, J.

De Kovessey v Coronet Props. (69 NY2d 448 [1987]) declared that when a rent-controlled tenant dies during the effective [424]*424period of a cooperative conversion plan, the tenant’s estate is not entitled to purchase the shares allocated to the tenant’s apartment at the insider price. Presented here is the question of whether an estate has the right to purchase where the decedent was a rent-stabilized tenant with a written lease, if the tenant dies during the plan’s effective period, after signing a no-buy pledge.

The facts, which are not disputed, are as follows: Celia Brandes resided at 25 Central Park West, apartment 4W, under a lease which expired November 30, 1989. During her tenancy, the owner began proceedings to convert the building to condominium ownership. In response to the sponsor’s 1986 "red herring”, Brandes, along with other tenants, signed a no-buy pledge. On September 10, 1987, the plan was accepted for filing by the Attorney-General. On December 4, 1987, Brandes died without having exercised her insider’s right to purchase.

Roberta Brandes Gratz, Brandes’ daughter, was appointed coexecutrix of Brandes’ estate. Since the exclusive period for tenants to purchase had been extended through May 15, 1988, on May 9, 1988, Gratz submitted an executed purchase agreement to the sponsor, which the sponsor rejected. The sponsor did so in reliance upon a memorandum promulgated by the Office of the Attorney-General, which advised that "estates are not bona fide tenants in occupancy and therefore sponsors do not have to offer them the right to buy.”

This action was then commenced by the estate, for specific performance of the sponsor’s obligations to convey the apartment, and for money damages. The sponsor has now moved for summary judgment dismissing the complaint and granting judgment on their counterclaims for a declaratory judgment and counsel fees. The estate has cross-moved for summary judgment on its complaint.

In De Kovessey (supra, at 455, 456) the Court of Appeals explained that "[a]n offer to sell shares in a cooperative conversion confers upon the tenant-offeree a power of acceptance which continues until the offer is accepted or otherwise terminated”, and that "an offeree’s power of acceptance is terminated, making acceptance impossible, when the offeree dies”. It held that "the critical component to establishing an entitlement to exercising the insider rights of a 'tenant in occupancy’ is a landlord-tenant relationship coupled with actual use and possession at the time the plan is accepted for filing” (69 NY2d, supra, at 457), and concluded that "none of [425]*425the estates before us on these appeals could be said to have been 'tenants in occupancy’ since none was using or occupying the unit at the time the plan was accepted for filing” (supra, at 457-458).

While the court specifically noted that "these were not lease cases” (supra, at 457), the existence of a lease in the case now before me does not, I conclude, remove it from the application of the broad De Kovessey rule.

I recognize that in a case whose facts are similar to those now before me, the Second Department required the sponsor to sell the allocated shares to the deceased tenant’s estate (see, De Christoforo v Shore Ridge Assocs., 116 AD2d 123 [2d Dept 1986]). I decline to follow that case because I believe that much of its reasoning is brought into question as a result of the subsequent De Kovessey decision, and because certain of its reasoning stands in opposition to a holding of the Appellate Division, First Department.

In De Christoforo (supra) a rent-stabilized tenant with a written lease died after the offering plan was declared effective, without having exercised her right to purchase. Her estate then, during the effective period, sought to purchase the shares allocated to her apartment. In upholding the estate’s right to purchase, the court noted that " 'A lease for a term of years is not terminated by the death of the lessee prior to the expiration of the term; the lease passes as personal property to the estate which remains liable for payment of the rent’ ” (116 AD2d, supra, at 126, quoting Schnee v Jonas Equities, 109 Misc 2d 221). Again quoting Schnee v Jonas Equities, the court added that " '[T]he estate replace[s] the deceased tenant as a party to the lease by operation of law’ ” (116 AD2d, supra, at 126). With these enunciated rules in mind, the court relied upon exactly those trial court rulings which were subsequently reversed by the Court of Appeals in De Kovessey (see, 116 AD2d, supra, at 128-129) to hold that the estate of a deceased tenant is a "tenant in occupancy,” entitled to purchase.

I conclude that De Christoforo (supra) can no longer be relied upon for the proposition that an estate steps into the shoes of, and retains all rights of a deceased lessee. First, it is clearly incorrect to the extent it relied upon the trial court decision later reversed by De Kovessey (supra). Furthermore, insofar as De Christoforo held that all the decedent’s leasehold rights pass to the estate, I find that authority in this Depart[426]*426ment does not confer such broad rights upon the estate, with regard to a leasehold interest. Real Property Law § 236 permits an executor of the estate of a deceased lessee to request that the landlord permit an assignment of the lease; if the landlord unreasonably refuses to consent, the lease is deemed terminated and the estate is no longer liable to pay rent. In Joint Props. Owners v Deri (113 AD2d 691 [1st Dept 1986]) the executor of a deceased tenant’s estate sought to assign the lease to himself, individually. When the landlord rejected the request, the executor, who was the son of the deceased tenant, took physical possession of the apartment. The First Department ruled that the landlord was entitled to a judgment of possession of the apartment:

"It is of course true, as Appellate Term noted, that a lease for a term of years is not terminated by the lessee’s death prior to the lease’s expiration. (Remford Corp. v Rosenfeld, 274 App Div 769; Schnee v Jonas Equities, 109 Misc 2d 221 [App Term, 2d Dept]; 2 Rasch, New York Landlord and Tenant Summary Proceedings § 1016 [2d ed].) In such cases the leasehold interest passes as personal property to the estate (EPTL 13-1.1), which remains liable for the payment of rent. (Schnee v Jonas Equities, 109 Misc 2d, at p 222.) Thus, an executor has the right, until the expiration of the lease, to possession of the demised premises in his capacity as representative of the deceased tenant’s estate. (Remford Corp. v Rosenfeld, 274 App Div 769, supra.) Though the leasehold interest is part of the estate an executor does not, however, have the unrestricted right to sublet the premises or assign the lease. A residential lease is not a property right that devolves upon death to be passed from one generation to another. Subject to constitutional and statutory limitations, a landlord has a basic right to select those persons who will occupy the demised premises.

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Related

De Kovessey v. Coronet Properties Co.
508 N.E.2d 652 (New York Court of Appeals, 1987)
Remford Corp. v. Rosenfeld
274 A.D. 769 (Appellate Division of the Supreme Court of New York, 1948)
Joint Properties Owners, Inc. v. Deri
113 A.D.2d 691 (Appellate Division of the Supreme Court of New York, 1986)
De Christoforo v. Shore Ridge Associates
116 A.D.2d 123 (Appellate Division of the Supreme Court of New York, 1986)
Rubinstein v. 160 West End Owners Corp.
145 A.D.2d 390 (Appellate Division of the Supreme Court of New York, 1988)
Schnee v. Jonas Equities, Inc.
109 Misc. 2d 221 (Appellate Terms of the Supreme Court of New York, 1981)

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Bluebook (online)
143 Misc. 2d 423, 540 N.Y.S.2d 940, 1989 N.Y. Misc. LEXIS 224, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gratz-v-century-apartment-associates-nysupct-1989.