In re Sipal Realty Corp.

8 A.D.2d 355, 188 N.Y.S.2d 910, 1959 N.Y. App. Div. LEXIS 7915

Opinions

Per Curiam.

Respondents, tenants in premises located on West 57th Street in this city, appeal from an order of Special and Trial Term which determined that 60% of the units in their building had been converted from residential to business space. Consequently it established rentals pursuant to section 2 of the Business Rent Law (L. 1945, ch. 314, § 2, as amd.).

The primary question involved is whether 60% of the premises in question are “ lawfully ” occupied as business space. This question in turn depends on whether the landlord, in providing for the conversions, was required to comply with section 13 of the State Rent and Eviction Regulations, adopted pursuant to the State Residental Rent Law (L. 1946, ch. 274, as amd.). Section 13 provides that although premises are actually converted from residential to commercial or professional use, they shall continue to be subject to residential rent control until an “ exemption ” is issued by the Rent Administrator.

Footnotes

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It is, of course, not quite accurate to say that section 13 of the regulations merely limits the landlord to the maximum rent which it may collect. The regulation states explicitly, in the conjunctive, that the premises “ shall continue to be subject to control and the landlord may not collect more than the maximum rent”. For premises to remain subject to control means that there is also supervision of the right of a statutory tenant to retain possession of the premises and the maintenance of essential services for the diminution of which a reduction in rent below the maximum is authorized by law.

There is no dispute that 60% of the units in the building are presently used as business space. It is also undisputed that the landlord has not secured an ‘ ‘ exemption. ’ ’ for 15 units which were converted from residential to business use after the effective date of section 13. If section 13 is valid and applicable then these apartments must be excluded from the number of units alleged to have been converted, and the landlord has failed to establish the minirmim required number of conversions.

Under subdivision (a) of section 2 of the business space statute, entire premises may be treated as business space only when 60% of the rentable area and 60% of the total number of units formerly used as dwelling space are “ lawfully ” occupied as business space. There is nothing in the statute or in the submitted legislative history to indicate that the requisites of a lawful conversion are to be determined solely with reference to the Business Rent Law. The several emergency rent control laws were first enacted at two successive sessions of the Legislature (L. 1945, ch. 3; L. 1945, ch. 314; L. 1946, ch. 274). If at all possible the statutes should be read together (McKinney, Cons. Laws of N. Y., Book 1, Statutes, § 221 et seq.).

Pursuing the matter further, the courts have long recognized the primary responsibility of the Rent Administrator with respect to the decontrol of residential properties, as distinguished from premises wholly and always outside the jurisdiction of the commission. (Matter of Schonbuch v. Abrams, 1 A D 2d 658; Matter of Fiesta Realty Corp. v. McGoldrick, 284 App. Div. 551, revd. on other grounds 308 N. Y. 869.) Section 13 was adopted by the Administrator to prevent the circumvention of the residential rent laws through the mere guise of a conversion to professional or commercial use. Though the regulation is found only in the State Residential Rent Regulations, its effect should not be so limited. If a valid regulation it has the full status of law (L. 1946, ch. 274, § 4, subd. 4; 1 N. Y. Jur., Administrative Law, § 103).

Nor is the fact that section 13 was adopted long after the rent control laws were first enacted of dispositive significance. It is true, as Special Term noted, that the Legislature did not authorize specifically a regulation such as section 13. But there is no doubt about the Rent Administrator’s power to adopt regulations to prevent circumvention of the residential rent control laws, and the phrase “lawfully occupied as business space ” must be construed to encompass such rules of law as are in effect at the time landlord seeks to convert his property from residential to business space. A contrary view would freeze the requirement of lawful occupancy to the statutory and administrative pattern which existed in 1945. There is insufficient warrant for such conclusion. Moreover, it is beside the point that section 13 may be designed in the first instance to protect the tenant whose premises are purportedly converted, for the statute under which wholesale exemption of the building is involved has as its beneficiaries the concededly residential tenants. It thus sufficies that they are, to a limited extent, the beneficiaries of the statute under which the present proceeding is brought. It is that statute which, by direct reference, requires compliance with the State Residential Rent Law and the State Rent and Eviction Regulations made thereunder.

It may be, on the undisputed proof in this record, that the landlord would be entitled to an order granting an ‘ ‘ exemption ’ ’ if application were made to the Rent Administrator. Once the facts establishing a bona fide conversion are presented the Administrator has no discretion to deny such an ‘ ‘ exemption ’ ’. However, .such a showing must first be made to the Administrator, in his threshold jurisdiction, before proof of conversion may be presented collaterally in another proceeding.

Accordingly, the order granting petitioner’s application for a determination of rent should be reversed, on the law, and the petition dismissed, without costs to any party.

The section provides: “ Any housing accommodation subject to these Regulations which may be rented on or after May 1, 1955 for commercial or professional use shall continue to be subject to control and the landlord may not collect more than the maximum rent until an order is issued by the Administrator exempting the housing accommodation from these Regulations during the period of occupancy by the tenant. Such order shall be issued by the Administrator where he finds that the renting complies with the requirements of state and local authorities and was made in good faith without any intent to evade the Act or these Regulations and shall be effective as of the date of the commercial or professional renting.”