The Petitioner commenced this "lease expiration" holdover proceeding seeking possession of the subject apartment #3L at 300 Suydam Street, Brooklyn, NY 11237. The petition alleges that the subject apartment is not subject to rent regulation because it is exempt pursuant to Rent Stabilization Law 26-504.2 as a high rent accommodation. Respondent appears by counsel and filed an answer with affirmative defenses including that respondent moved into the subject rent stabilized apt in January 2003, her last two year rent stabilized renewal lease expired March 31, 2011, and the monthly rent was $1,007.35. The first affirmative defense states that respondent had poor conditions in the apartment and she relocated in early 2010 for three months while repairs were performed. The petitioner corrected the conditions, and respondent moved back into the apt. Respondent states that although petitioner restored her to the apartment, petitioner created an illusory tenancy. Respondent alleges she never surrendered possession of the subject apartment, she resumed her uninterrupted tenancy, and the apartment is subject to rent stabilization. The second affirmative defense alleges that petitioner and/or its predecessors-in-interest would only restore respondent to possession if her brother signed a vacancy lease with the owner and respondent understanding that her brother would not reside in the unit.

Respondent's brother, Jose Francisco Juarez, signed a one year rent stabilized lease with a 17% vacancy increase, with Individual Apartment Improvements (IAI's) for $633.75, for a total rent of $1,802.28, with a preferential rent of $1,100.00. Respondent alleges that she returned to the apartment on May 1, 2010, and she has resided in the unit with the permission, knowledge and consent of the petitioner, and the prior owner. Respondent paid monthly rent to petitioner, and Jose Francisco Juarez, an employee of the petitioner, has never resided in the subject apartment.

Petitioner's first witness, Ivan Luk, a nonparty witness, testified that he purchased the subject building in December 2009.He is a structural engineer and self employed. He owned the subject building for three years during which time respondent was the rent stabilized tenant in the subject apartment 3L. He spoke to all the tenants the day after he purchased the building including the respondent. Petitioner was not a credible witness. He testified he spoke to respondent when he first purchased the building, but denied inspecting her apartment. A month later, respondent informed Mr. Luk that she was moving out, and he told her to put it in writing. Petitioner's 2 is respondent's letter, dated January 14, 2010, stating she is moving out. The letter states,

This is to notify you that the undersigned Mercedes Juarez will be moving from 300 Suydam Street, 3L, Brooklyn, NY 11231, on January 31st, 2010. We are moving out because the roof is leaking. We understand your office has tried to repair the roof numerous times, but the leak has not stopped. This provides at least 7 days written notice as required in our rental agreement.

Mr. Luk testified that a week later the subject apartment was empty, and respondent did not return the keys. Mr. Luk testified his plan was to renovate the apartment, and he hired Omega Construction to do the work. This company is owned by Oscar, a tenant on the second floor, who is the respondent's brother, and respondent's other brother, Jose Francisco Juarez, who does not reside in the building. When the renovations were complete, Mr. Luk signed a rent stabilized lease with respondent's brother, Jose Francisco Juarez, who also worked on the renovation. Mr. Luk testified he did not go into the subject apartment after the renovations, and he does not know who actually resided in the apartment. Mr. Luk's testimony that he did not inspect the subject apartment, either before or after the repairs, is incredible. He went to the subject building once a month, and did not enter the subject apartment. Mr. Luk then testified he signed a lease with the respondent for the subject apartment, dated April 1, 2011, and it was a vacancy lease. He admitted that respondent lived in the apartment when he purchased the building.^[FN1] He stated that from January 2010 until April 2011, respondent did not reside in the apartment. Mr. Luk made this claim despite receiving rent from the respondent for every month, in her name. Mr. Luk admitted he did not know if Jose Francisco moved into the apartment, nor did he see him around the building after the repair work was finished. The last lease the witness signed with respondent, dated April 1, 2014, has a monthly rent of $2,335.29. It has a preferential rent rider setting the rent at $1270 for a period of one year.

Mr. Luk admitted he did not know if Jose Juarez ever moved into the apartment. He did not see Mr. Juarez move in. The rent in the vacancy lease, April 1, 2011, is $2,162.74, and the apartment is no longer rent stabilized. When asked on direct examination about the estimates for the renovation work, paid bills, and receipts, the witness stated he does not have originals, and he did not have any of these documents. He did produce a receipt for a new stove and refrigerator from Lowe's. He testified he applied for an MCI at the DHCR, and it was granted by order dated May 25, 2012. Mr. Luk sold the building to the petitioner, W 300 LLC, on October 2, 2014 [*3](exh. 12) and he produced the assignment of leases and rents (exh 13).

Mr. Luk testified on cross examination that he did not inspect all the apartments prior to purchasing the building, and he did not go inside the subject apartment. He could not recall if respondent complained about the condition of the apartment, but she did state she wanted to vacate and she signed the letter stating her intentions. Mr. Luk did recall that respondent complained about a leak, and he attempted to fix it. After respondent vacated the apartment, Mr. Luk stated he wanted to renovate the apartment, but it did not need any repairs. It is not clear how Mr. Luk knew the apartment did not need repairs as he stated he did not inspect it. Mr. Luk admitted that he re-positioned the door to 3L to make the kitchen wider, and a door was removed from the bedroom to make a closet larger.

Mr. Luk testified that he had a conversation with respondent after the work in the unit was finished. She stated she was ready to move back in. When asked on direct examination, if the vacancy lease he offered to his worker, Jose Juarez, was a condition to be met in order for respondent to move back into the apartment, Mr. Luk stated it was not a condition. He admitted he does not know who moved into the subject apartment after the work was finished. Mr. Luk signed a vacancy lease with Jose Juarez that had a preferential rent of $1100./month. Mr. Luk testified on cross examination that he did not recall receiving rent checks in respondent's name during Jose Juarez' tenancy. Prior to the expiration of Jose's one year lease, Jose and respondent approached Mr. Luk about respondent getting a lease. Petitioner's 6, respondent's lease dated April 1, 2011, allegedly when she moves back into the apartment, lists her current address as 3L, the subject apartment. When questioned about his, Mr. Luk stated it must be a mistake. Mr. Luk admitted that when he purchased the building, it had six rent stabilized apartments. By 2014, three of the apartments were de-stabilized. Petitioner's property manager, David Greenberg, testified that five of the six units in the building have been removed from rent stabilization.

Respondent Mercedes Juarez testified that she and her husband moved into the subject building in 2003, and the rent was $800/month. When she moved into the subject apartment, there was no heat in the winter, there were roaches, bed bugs and rats, and the windows did not work. Respondent informed the next owners, "Paul and Tom" about the bad conditions. Mr. Luk was the following owner and he came to the subject apartment in 2009. Respondent showed Mr. Luk the entire apartment, and at the time respondent was sleeping in the living room with her husband and child. She showed Mr. Luk the broken windows throughout the apartment, the walls were damp and turned black. The ceiling in the kitchen was "rotten" due to leaks whenever it rained. The bathroom ceiling was breaking, a piece of cement came out of the living room ceiling, and it was rotting. Respondent testified she showed Mr. Luk every room and every condition in the apartment. Mr. Luk did not do any repairs. Respondent was a credible witness.

Respondent testified she cleaned the walls, and painted the apartment three times at her own expense, but the leaks and mold returned. She installed an electric radiator, also at her own expense, but after two months she could no longer afford the cost of the electricity. Respondent put down traps for rats, and set off bombs in the apartment to kill the roaches.

Respondent testified that she and her family moved out of the apartment for three months. Her daughter was sick with asthma and, bronchitis once a month in the winter. She knew that her brothers were going to repair the apartment for the landlord, and she moved her family out so [*4]the work could proceed. Respondent did not notify the landlord, Mr. Luk, and she did not return the keys. Respondent denied writing Mr. Luk a letter stating she was moving out. Respondent testified that she does not read or write in English, and she did not write or sign the letter. She knew her brothers were hired by the landlord to repair the apartment and do work to make it habitable. When her brothers informed her the work in 3L was completed, she called Mr. Luk and informed him she was ready to return to the apartment.

Respondent and Mr. Luk met at the subject building, and discussed respondent moving back into the apartment. Mr. Luk stated that he would permit respondent to move back into the apartment on the condition that her brother sign the lease for 2010. When the work was completed, Mr. Luk called respondent and she went with her brother to sign the lease. Respondent, her brother Jose, and Mr. Luk sat at respondent's kitchen table in 3L. Mr. Luk instructed respondent's brother to sign the lease, even though Mr. Luk stated that Jose would not be living in the apartment. Mr. Luk stated that after one year, he would put the lease in respondent's name. Respondent paid the rent and security in cash to Mr. Luk at the signing. Respondent's brother lives at 185 Troutman Street, Apt 2R, Brooklyn, NY, and he never moved into the subject apartment. When respondent saw the monthly rent in the 2010 lease was $1802.28, and not $1100.00, she questioned Mr. Luk about the rent. He said not to worry, that respondent will only have to pay $1100.00, and the higher amount is for the repairs.

Respondent testified she sent the monthly rent in her name to Mr. Luk in money orders pursuant to the May 1, 2010 lease that her brother Jose signed. Respondent's C (1-15) are the money orders respondent sent to Mr. Luk and Suydam Holdings LLC in the amount of $1100. Respondent's signature is on every money order, and the name of Jose Francisco Juarez does not appear on any of the rent payments. Respondent's D (1 & 2) are money orders to petitioner, with respondent's signature, for rent dated March 26, 2011. Respondent testified credibly that she filled out the money orders, signed them, addressed the envelope to Mr. Luk, and sent him the rent from May 2010 until the expiration of the lease. It is undisputed that respondent paid the rent each month, in her name, during the year of the lease signed by her brother, Jose Francisco Juarez.

Respondent testified that when the 2010 lease expired, Mr. Luk brought her a new lease to sign. He came to the subject apartment where respondent was residing with her family. Respondent testified she signed the new lease at her kitchen table with Mr. Luk, and no one else was present. She stated the lease was in English, and he did not give her time to translate it. Mr. Luk brought a pen, and instructed her to sign the lease right away. Respondent testified the monthly rent in the new lease was $1180. Respondent noticed there was a higher number in the lease. Mr. Luk said this is a two year lease and you will only pay the $1180. Then this two year lease expired, Mr. Luk brought the respondent a new lease. She did not have an opportunity to review the lease, written in English, and Mr. Luk instructed her to sign the lease right away. The next lease she signed expired on March 31, 2015.

Respondent received a letter from the new landlord, the petitioner, stating that they purchased the building in 2014. Petitioner called respondent on the telephone to come in and sign a new lease. The lease had a monthly rent of $2500.00, and respondent did not sign the lease. When she inquired about the rent, the petitioner informed her she had a preferential rent before. Respondent testified she did not know that her apartment was no longer rent regulated.

When presented with petitioner's exh 2, a letter dated January 14, 2010 from "Mercedes Juarez" to Suydam Holdings LLC, stating that she is moving out of the subject apartment, respondent testified that she did not write the letter, and it is not her signature at the bottom. Respondent testified that she does not read or write English, and she did not write the letter.

Respondent stated that her apartment looks the same today except that the repairs are completed, and the kitchen is smaller. The kitchen looks better, but it is smaller. The windows were replaced, and the walls no longer "sweat." The leak in the bathroom was repaired. Respondent testified that now the radiators work and there is heat in the apartment. The only remaining condition is the vermin, the mice and roaches. Respondent stated she has been paying $1270.00 a month since this proceeding commenced.

On cross examination, she stated moved into the subject apt. in 2003 with her husband, who also does not read or write English. Oscar and Jose Francisco are her brothers. Oscar also lives in the subject building, and has lived there for twenty years. For a while Jose Francisco lived with Oscar, and then he got an apartment in another building, 185 Troutman Street, Brooklyn, NY. Respondent repeated her testimony that she showed Mr. Luk all the rooms and bad conditions in the subject apartment when he purchased the building. Respondent testified that she knew Mr. Luk was going to repair the subject apartment because her brothers told her they were going to do the work. She moved out of the apartment in January 2010 for three months until the work was completed. She did not inform Mr. Luk she was moving out, she did not return the keys, and she did not pay the rent for those three months. When the repair work was completed, respondent called Mr. Luk about moving back in.

Respondent produced a non party witness, Jose Francisco Juarez, respondent's brother and the former owner's worker who repaired the subject apartment in 2010. Mr. Juarez is an interested witness as he is respondent's brother, and he was also employed by the former owner, Mr. Luk, to do repair work in the apartment. Mr. Juarez was an impressively credible witness, with direct, clear, credible and earnest testimony. Mr. Juarez testified that he lived with his brother Oscar Juarez in Oscar's apartment, 2L, in the subject building, from 1998 to 2007. In 2007 the witness got his own apartment at 185 Troutman Street, Brooklyn, NY. Respondent produced his leases for apartment 2R at 185 Troutman Street, Brooklyn, NY 11206 (Troutman St apt), from 2008 through and including 2015. He also produced the DHCR registrations for the Troutman Street apt, 2R, from 2008 through 2016 reflecting that he is the rent stabilized tenant. The witness produced his rent receipts for the Troutman Street apt. from June 2007, when he paid June 2007 rent and security, through and including 2007. He produced his rent receipts for Troutman Street from January 2010 through November 2011.

Mr. Juarez testified that he continuously resided at Troutman Street from June 2007 to the present date. He never lived in the subject apartment, and he never intended to live in the apartment. He testified that when he signed the lease for the subject apartment it was clearly understood that he would not be moving into it. His sister, the respondent, paid Mr. Luk the rent, and it was clear to all three of them that respondent was moving in. Mr. Juarez's signature on the lease was required by Mr. Luk to enable respondent to move back in.

Mr. Juarez testified that the subject apartment was in very bad condition. He described the poor conditions in the apt in specific detail. He also testified that the electric circuit breakers continuously went off, and he would go to the basement for his sister to fix the breakers. He [*5]stated the windows throughout did not work, and it was cold and drafty. The linoleum floors were broken, the walls had chipping paint throughout. The plumbing leaked in the bathroom into the apartment below, and the bath tub was in bad shape. The walls in the second bedroom were in the worst shape as they were covered in mold.

The witness and his brother Oscar, who worked for Mr. Luk, were hired to repair the subject apartment. Mr. Juarez's sister, the respondent, moved out for three months with her family, so they could do the repairs. Mr. Juarez testified that his sister lived on Stanhope Street for about three months while he and Oscar repaired the apartment. The witness worked for three months changing the windows, installing an exhaust in the kitchen, changing the floors, walls and ceilings throughout the apartment. They installed a new refrigerator, stove and cabinets in the kitchen. In the bathroom he installed a new bathtub, new floor, new walls, sink and mirrors. The ceiling and roof were replaced because they "all leaked."

In the living room, a new ceiling was installed, the walls were plastered and painted. Mr. Luk said he would repair the floors, so the respondent bought all new tiles for the floors in all the rooms. In the second bedroom, which had mold on the walls, they put up new sheet rock with insulation on the walls, and a new ceiling. The electric wiring and breakers were repaired. Mr. Juarez testified he kept his sister, the respondent, informed about the progress of the repair work being done in the apartment.

Ivan (Mr. Luk) told the witness that he would let respondent move back into the subject apartment on the condition that he, Mr. Juarez, signed a one year lease. His brother, Oscar, translated this conversation with Ivan. The lease was signed at respondent's kitchen table in the subject apt. When asked if he was able to read the lease, the witness testified that Mr. Luk stated, "just sign it." Mr. Juarez never paid any rent or security for the apartment, the respondent paid the rent, and gave the security. Mr. Juarez testified he never gave Ivan any indication he would be living in the apartment, and Mr. Luk did not offer him a renewal lease at the expiration of the lease. The witness stated that he never saw Mr. Luk again after 2010.

Mr. Juarez was presented with petitioner's exh. 20, a letter dated March 13, 2013 from "Jose Francisco Juarez" addressed to the DHCR, Tenant Protection Unit in reference to the subject apt. The letter states,

I was the tenant in the unit stated above back in May 2010. When I moved in, I have received a delivery of a new Frigidaire 18.2 Cu ft Top Freezer Refrigerator and a new GE 30"Free-Standing Gas Range

Mr. Juarez testified that he did not write this letter, and he previously testified that he cannot read or write in English. He stated that he did sign something in 2010 in reference to receiving a stove and refrigerator. He did not sign anything in 2013, nor did he see Mr. Luk after 2010.

On cross examination, Mr. Juarez testified that the conditions in the subject apartment were very bad, and they worked for three months, five days a week, eight hours a day to fix everything. There were two people working on the apartment during this time. He testified that his sister, the respondent, could not live in the apartment during the work because it was too much of a mess. Mr. Juarez repeated his testimony that he never paid Mr. Luk any money for rent for the subject unit, and that he never paid rent to Mr. Luk for any apartment. He repeated his testimony that he never lived in 3L. He signed a lease with Mr. Luk for 3L because it was the [*6]only way the landlord would permit his sister to move back into the apt. He signed that he received a refrigerator and a stove in 2010.The only people present when he signed the lease with Mr. Luk, were the two of them, and his sister, the respondent.

The second nonparty witness, Myrna L. Avila, is the wife of Jose Francisco Juarez, and the sister-in-law of respondent. She testified that she worked as a babysitter for respondent's daughter for two years in 2008 to 2009. Respondent's daughter was ill with coughing, and asthma. The witness would administer the "pump" when the girl had an asthma attack. Ms. Avila testified that the conditions in the apartment were terrible. The kitchen walls were black due to leaks, and the windows leaked. She covered the windows with towels to keep out the cold. The bathroom had leaks, and mold. The living room also had black all over the walls. The second bedroom had a leak with mold on the walls. The witness testified that now the apartment is plastered and painted. She observed the repair work her husband and brother-in-law did in the apartment. Ms. Avila brought food to her husband while he was working there, and she was able to see the work being performed. She never lived in the subject apartment.

Rosa Osdueda, the third nonparty witness, testified she is a neighbor and friend of the respondent. She resides on the first floor in the subject building, and she visited respondent four to five times a month after she moved in. In the early 2000's the subject apartment was "terrible." Ms. Osdueda testified that there was black mold on the walls in the bedroom, the living room ceiling was in bad shape, and water leaked from the toilet. She stated that respondent moved out of the subject apt in 2010, and respondent was waiting for the repairs to be done so she could move back in. The witness testified that "Ivan" gave respondent back the apartment.

The witness testified that her son and Oscar Juarez had a small construction company and they worked for "Ivan." Francisco Juarez also worked with them. The witness would bring coffee and crackers to the men while they were working on the apt, and she observed the work. They replaced the walls, and the windows, and installed insulation. She testified that the apt is better, but the common wall with the adjacent apartment still leaks.

On cross examination, the witness admitted that petitioner evicted her son, Milton, from apt. 1L in the subject building. The witness stated she filed a complaint at the DHCR against petitioner in May 2016.

Petitioner produced Ivan Luk as a rebuttal witness. Mr. Luk testified he made no arrangements for respondent to move back in after the repairs were completed. He admitted respondent asked to move back in after the work was finished. Mr. Luk was not a credible witness.

The second rebuttal witness was David E. Greenberg, the petitioner's agent. His testimony was brief and not probative of anything.

Petitioner commenced this "no grounds" holdover seeking possession of apartment 3L on the grounds that respondent's lease expired on March 31, 2015. The petition states in paragraph (9) that the apartment is not subject to rent regulation because it " . . . became exempt pursuant to Rent Stabilization Law Sec. 26-504.2 as a "High Rent Accomodation" which became vacant after April 1, 1994.

It is undisputed that respondent moved into the subject apartment pursuant to a rent [*7]stabilized lease in 2003. Exhibit 4 is respondent's rent stabilized renewal lease which was in effect from April 1, 2009 through March 31, 2011. It is undisputed that respondent moved out of the apartment for three months in 2010, while her lease was in effect, due to bad conditions in the apartment. Respondent knew the landlord had hired workers to repair the apartment as her two brothers were part of the construction team hired to fix 3L. It is undisputed that respondent never returned possession of apt. 3L to the landlord. She did not return the keys to the landlord, she did not notify the landlord she was vacating, she did not request return of her security deposit. Petitioner produced a letter, dated January 14, 2010, from respondent to Mr. Luk, the former owner stating she was moving out because the roof is leaking. Respondent testified credibly that she does not read or write in English, and she denied writing this letter.

It is undisputed that respondent never returned the keys or legal possession of the apartment, Mr. Luk did not commence a summary proceeding to regain legal possession of 3L during the time respondent's renewal lease was in effect. Respondent resumed her tenancy in 2010 after the repairs were completed and her renewal lease was still in effect.

Mr. Luk was not a credible witness, and he admitted his only notice that respondent was surrendering possession was this letter, exh. 2. Mr. Luk's testimony was not credible, and not believable. It is not credible that respondent wrote the letter, exhibit 2. He testified that he never saw the rooms in 3L or the bad conditions. Respondent testified credibly that Mr. Luk walked throughout the entire apartment with her after he purchased the building. He testified he did not make arrangements for respondent to move back into 3L upon completion of the repairs. Yet he fails to dispute that he met with respondent, and her brother, Jose Francisco, at her kitchen table in 3L upon completion of the repairs. Both Jose Francisco Juarez and respondent were credible witnesses. They testified that Mr. Luk stated that Jose Francisco Juarez had to sign a vacancy lease in order for respondent to have her apartment back. Mr. Luk did not know if Jose Fernando Juarez ever moved into the apartment, he never received rent from him, and he did not see him around the building after 2010.

It is undisputed that respondent's renewal lease was in effect during the three months she was out of the apartment, and in effect when she moved back in May 1, 2010. In May 2010, while respondent's rent stabilized renewal lease was in effect, petitioner gave her brother, Jose Francisco, a lease for the same apartment. It is undisputed that Mr. Luk never believed that Jose Francisco was moving into the subject apartment. Respondent paid the rent every month. Mr. Luk testified he did not see Mr. Juarez move in, living there, or anywhere in and about the building.

The provisions of the Rent Stabilization Law represent a pragmatic balance between affording the owners of properties adequate periodic rent increases to enable them to properly maintain their properties in the face of rising costs, while at the same time affording to tenants an assurance against unreasonable escalations in rent and also various other rights and protections . . . The attempts which have been made to upset this balance, and to pervert the beneficial purpose of the law, have been varied and creative and ofttimes cynically cloaked in a mantle of misleading nomenclature and fictitious characterizations of tenancy status. It is in response to such schemes that the law of illusory tenancy evolved. Matter of Avon Furniture Leasing, Inc. v. Popolizio, 116 AD2d 280, 283, (1st Dept., 1986).

Where a "tenant" rents an apartment, which it never intends to occupy, but rather rents it [*8]for the purpose of depriving a tenant in occupancy rights under the Rent Stabilization Law, it is an illusory tenancy. An overwhelming preponderance of the credible evidence makes it clear that when respondent attempted to move back into her rent stabilized apartment after her three month absence for repair work, the former owner would not permit her to move back in until her brother signed a vacancy lease. This occurred while respondent's renewal lease was in effect. The credible evidence supports a finding that all three parties involved, Mr. Luk, the owner, respondent, and her brother, all understood that respondent was moving back in, her brother was never moving in, and respondent was resuming her tenancy. Respondent paid the rent every month, and lived continuously in 3L. Here there is actual notice on the part of the owner, Mr. Luk, that respondent was residing in the apartment, and not her brother who signed the vacancy lease. Vesky v. Antunez, 191 Misc 2d 246 (App Term, 1st Dept., 2002). The owner set up the vacancy lease signed by respondent's brother to improperly profit by violating the rent regulations. Primrose Mgt. Co v. Donahoe, 253 AD2d 404 (1st Dept. 1998).

Based on a preponderance of the credible evidence, the most recent valid lease is respondent's two year renewal lease from April 1, 2009 through March 31, 2011, and therefore, the petition is dismissed with prejudice. This constitutes the decision and order of the court.