Rent controlled apartments continue to dwindle in number. Because of their rarity, many younger New Yorkers and newer residents regard them with a sense of awe. There was the tale of the 84-year-old woman who recently passed away having never spent more than $30 per month on her Greenwich Village apartment. Go back to 2012 and you’ll find the Post story on the seniors who spent as little as $55 each month to live in Soho. Go back even further and you're likely to hear about Fannie Lowenstein, who rented a three-bedroom suite in the Plaza for $500 per month.
To say there are some peculiarities when it comes to the law that regulates rent controlled apartments would be an understatement. There are a lot of them. However, this post is going to focus on only one: Roommates (i.e. a non-family member who is cohabitating with a person on the lease, but who is not on the lease themselves). Unlike rent stabilization law, tenants in rent controlled units can ask their roommates for whatever they want in rent. In 270 Riverside Drive Inc. v. Braun, which was decided in 2004, the three-judge panel of the Appellate Term, First Department, ruled that the rent-controlled units were not subject to the 2000 amendment to the Rent Stabilization Code stipulating that tenants are barred from asking more than a proportionate share of the rent (no more than the legal rent divided by the number of occupants).
However, rent controlled apartments are not allowed to keep all this rent money to themselves. This is where it gets interesting. According to § 2202.6 of the New York City Rent and Eviction Regulations, “The administrator may grant an appropriate adjustment of a maximum rent where he finds that there has been, since March 1, 1959, a subletting without a written consent from the landlord or an increase in the number of adult occupants who are not members of the immediate family of the tenant, and the landlord has not been compensated therefor by adjustment of the maximum rent by lease, or by order of the administrator, or pursuant to the State Rent Act or Federal Act. Such adjustment shall be effective only during the period of subletting or increase in the number of tenants.”
In other words, stabilized tenants are restricted in what they can charge roommates, but landlords cannot ask for a rent increase if a roommate moves in. Conversely, rent controlled tenants are free to charge roommates whatever they want, but landlords can ask for a rent increase if there is an increase in the number of tenants in the unit.
This brings us to the case of the week. In this case, a rent-controlled tenant began renting out part of their apartment to a roommate in 2008. Subsequently, the landlord filed an application for an adjustment because this roommate was a non-family occupant. This application was granted. On March 20, 2009, the Rent Administrator ruled that the landlord was entitled to a 10 percent increase on the maximum collectible rent. The Rent Administrator also ruled that the landlord was entitled to collect 10 percent of the maximum collectible rent for each additional occupant of the unit per month, but that the “increase is effective only for the period in which the increased occupancy continues.”
On December 5, 2017, the landlord filed another application seeking a rent adjustment because the tenant had taken on a second roommate—as of December 1, 2017. Based on the order from March 2009, the landlord reasoned that another 10 percent increase of the maximum collectible rent was due. The Rent Administrator agreed. On April 26, 2018, the Administrator ruled that the landlord could raise the maximum collectible rent by 10 percent. The tenant filed a Petition for Administrative Review on May 31, 2018, arguing that § 2202.6 does not allow an increase for each roommate.
On August 21, 2018, the Rent Commissioner affirmed the decision of the Rent Administrator, largely because § 2202.6 very clearly does allow an increase for each roommate. The Rent Commissioner also noted that the 10 percent increase does not represent an increase of the base rent, but rather a “surcharge which is separate from, and therefore is not to be included in, the subject apartment’s maximum base rent and maximum collectible rent.” The Commissioner also ruled that the surcharge is only effective so long as the second roommate remains in the apartment.
What to take away: Tenants with rent-controlled apartments are allowed roommates and landlords are allowed to collect surcharges for each roommate.
To read more about this case, see what our friends at Landlord v. Tenant have to say.