Civil Court of the City of New York, Queens County, September 23, 2024

Butnick & Levenson LLP for petitioner.

Introduction

This summary holdover proceeding presents an opportunity for consideration of New York's recently enacted Good Cause Eviction Law (L 2024, ch 56, § 1, part HH) (hereinafter GCEL), the most comprehensive expansion of rent regulation in New York in half a century. While GCEL is certain to raise a host of novel legal issues, the narrow question here is whether a landlord subject to GCEL can decline to renew and effectively{**85 Misc 3d at 557} terminate a tenancy through the statutory mechanism of a holdover proceeding (RPAPL 711 [1]) solely because the tenant owes rental arrears, or if their remedy remains limited to a nonpayment (RPAPL 711 [2]). Unlike in a holdover, a nonpayment requires service of a good-faith 14-day rent demand prior to filing and allows the tenant the option of avoiding eviction by paying the amount sought prior to commencement (RPAPL 711 [2]), as well as before the initial hearing date (RPAPL 731 [4]), or any time postjudgment by paying the full rent due prior to execution of the warrant of eviction (RPAPL 749 [3]).

For the reasons stated below, after review of the statute and the overarching statutory framework, this court concludes that GCEL does not authorize a nonrenewal holdover against a covered tenant based solely on their owing rental arrears. The appropriate remedy to enforce nonpayment in such circumstances remains limited to a nonpayment proceeding, the precise statutory mechanism fashioned by the legislature in RPAPL 711 (2) with its more liberal cure provisions.

Relevant Factual and Procedural History

Petitioner 1719 Gates LLC filed the instant holdover against Dianne Torres and her undertenants on May 14, 2024, seeking possession of an apartment within a six-unit multiple [*2]dwelling in Queens, New York (see NY St Cts Elec Filing [NYSCEF] Doc Nos. 1, 2). The basis of the proceeding is the expiration and nonrenewal of respondent's lease expiring March 31, 2024, following service of a 90-day notice of termination and nonrenewal pursuant to Real Property Law §§ 226-c and 232-a dated January 25, 2024, with an effective termination date of April 30, 2024 (see NYSCEF Doc No. 1 at 6). The petition pleads the building is exempt from rent stabilization by virtue of its construction after 1974 and/or substantial rehabilitation (NYSCEF Doc No. 1, petition ¶ 7). The petition further alleges that "[g]rounds for Non-Renewal exist, pursuant to RPL 216 (1) (a) (i) in that the tenant has failed to pay rent due and owing for rent that came due prior to the enactment of the 'Good Cause' Eviction Law" (id. ¶ 8).

The respondents have never appeared, and as a result the court conducted an inquest on September 11, 2024. Petitioner's property manager Shaye Falkowitz testified, and the court admitted into evidence a certified deed, certified multiple dwelling registration, certified rent registration history listing the subject apartment as exempt due to substantial rehabilitation by filing dated July 27, 2015, a nonregulated lease renewal{**85 Misc 3d at 558} with respondent for the period of April 1, 2023, through March 31, 2024, for $4,100 per month, and a rent ledger reflecting $29,890 in outstanding rental arrears and use and occupancy owed through September 2024, the bulk of which are posttermination arrears for the months of April 2024 through September 2024. Mr. Falkowitz testified that he authorized service of the 90-day nonrenewal and termination notice, that respondent moved into the premises in 2021, that the last lease was never extended after it expired, and that no rent was accepted after the lease expired. The court allowed Mr. Falkowitz to submit a supplemental affidavit of facts dated September 18, 2024 (NYSCEF Doc No. 5), wherein he states that the building was vacant in 2014-2015 when it was gut renovated, that over 75% of the building-wide systems were replaced, and that this work did not require a new certificate of occupancy as a "Type 2 Alteration."

Discussion

The Good Cause Eviction Law (GCEL), signed on April 20, 2024, and effective immediately (L 2024, ch 56, § 1, part HH, § 7), is primarily codified in article 6-A of the Real Property Law. While GCEL did not achieve the nearly universal rent regulation sought by its chief proponents, it nonetheless dramatically alters the residential rental housing landscape in New York City for covered dwellings, which includes most residential housing accommodations built before 2009 where the landlord owns, either directly or indirectly, more than 10 units of housing within New York State (Real Property Law §§ 211 [3] [a]; 214 [1]-[2]).^[FN1]

Tenants in housing accommodations subject to GCEL are entitled to two principal benefits that unregulated tenants are not. First, allowable annual rental increases are tied to an inflation index and generally capped at no more than 10% (Real Property Law §§ 211 [7]; 216 [1] [a] [i]; 231-c; RPAPL 711 [2]). Second, and most relevant to the instant proceeding, a tenant covered by GCEL can no longer be evicted in a "no grounds" holdover based on the landlord's mere election not to [*3]renew the lease. Rather, tenants covered by GCEL can only be removed{**85 Misc 3d at 559} from possession based on one of the "good cause" grounds enumerated in Real Property Law § 216 (1) (a)-(j) "upon order of a court of competent jurisdiction entered in an appropriate judicial action or proceeding" (Real Property Law § 216 [1]).

The first ground for removal in Real Property Law § 216 (1), and the basis of this proceeding, is that "[t]he tenant has failed to pay rent due and owing, provided however that the rent due and owing, or any part thereof, did not result from a rent increase which is unreasonable" (Real Property Law § 216 [1] [a] [i]). Other grounds include where the tenant breached a substantial violation of their tenancy, so long as the landlord has first served a 10-day notice to cure (Real Property Law § 216 [1] [b]), or where the tenant is committing or permitting a nuisance, which does not require a notice to cure (Real Property Law § 216 [1] [c]). Another ground is a tenant's failure to sign a renewal lease, so long as the offer was timely made within 30-90 days prior to lease expiration and does not seek an unreasonable increase as defined by statute (Real Property Law § 216 [1] [j]).

In the instant matter, petitioner concedes the premises are a covered dwelling under GCEL, and that it was required to demonstrate a good cause ground for eviction in that the petition was commenced after April 20, 2024, the effective date of the statute.^[FN2] Petitioner argues it was entitled to decline to renew respondent's tenancy and to commence a summary holdover eviction proceeding, rather than simply file a nonpayment proceeding, because respondent defaulted on her obligation to pay rent due under the last lease, a basis for removal under the statute (Real Property Law § 216 [1] [a] [i]). According to the rent ledger admitted into evidence at inquest, respondent was in rental arrears for approximately three months of rent due under the lease expiring on March 31, 2024, at the{**85 Misc 3d at 560} time this proceeding was filed on May 14, 2024, as well as for use and occupancy for the period of April 2024 through September 2024, after the lease expired and petitioner declined to renew, as of the date of inquest on September 11, 2024.

While it certainly would have been within the legislature's power to do so, GCEL did not create new causes of action for summary eviction proceedings in Housing Court. Instead, the statute merely imposes additional conditions for removal of covered tenants based on the grounds listed in Real Property Law § 216. The grounds for a summary eviction proceeding against a tenant still lie exclusively within RPAPL 711. This includes a nonpayment under RPAPL 711 (2) or a holdover pursuant to RPAPL 711 (1) following either the early termination of the agreement, or the expiration and nonrenewal of the tenancy.

Nonpayments and holdovers have significant differences and prerequisites. A nonpayment presumes the existence of an ongoing landlord-tenant relationship and requires a 14-day good-faith rent demand prior to commencement where the tenant has the option to cure [*4]the default and pay the alleged arrears to avoid coming to court (see Greenport Preserv., L.P. v Heyward, 74 Misc 3d 46 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2021]). In contrast, a holdover is only viable where the tenancy has been terminated before commencement and the landlord-tenant relationship remains severed (see Nyack Plaza v Parker, 18 Misc 3d 126[A], 2007 NY Slip Op 52353[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2007]). A holdover may be premised on the tenant's holding over after the expiration of the natural term in the last agreement following a nonrenewal notice—prior to the enactment of GCEL this was often colloquially called a "no grounds" holdover (see RPAPL 711 [1]; Real Property Law §§ 226-c, 232-a; Federation of Orgs. for the NY State Mentally Disabled, Inc. v Lindsay, 80 Misc 3d 131[A], 2023 NY Slip Op 51092[U] [App Term, 1st Dept 2023]; Frischer v Goldner, 76 Misc 3d 1226[A], 2022 NY Slip Op 51060(U) [Civ Ct, Kings County 2022])—or "by reason of the [early] termination of the term fixed in the lease pursuant to a [conditional limitation] provision contained therein" (RPAPL 711 [1]), often referred to as a "for cause" holdover (see Fourth Hous. Co., Inc. v Bowers, 53 Misc 3d 43 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2016]). In a for cause holdover based on a tenant's breach, the tenant is generally afforded a 30-day postjudgment opportunity to cure non-objectionable conduct (RPAPL 753 [3],{**85 Misc 3d at 561} [4]). There is no right to a postjudgment cure in a no cause nonrenewal holdover, at least in cases predating GCEL (see Park Summit Realty Corp. v Frank, 107 Misc 2d 318, 321 [App Term, 1st Dept 1980], affd 84 AD2d 700 [1st Dept 1981], affd on other grounds 56 NY2d 1025 [1982]).

With respect to the grounds for removal of a GCEL-protected tenant enumerated in Real Property Law § 216, the statute does not specify the appropriate mechanism for removal in a summary proceeding, i.e., it does not state which grounds should be filed as a nonpayment under RPAPL 711 (2), an end of natural term holdover after service of a nonrenewal notice in the time frame required by law (RPAPL 711 [1]; Real Property Law §§ 226-c, 232-a), or a more expedited for cause termination of tenancy upon service of a notice fixing an early termination date (RPAPL 711 [1]). Rather, Real Property Law § 216 merely states that at least one of the enumerated good cause grounds must be established in a court of competent jurisdiction before removal, to wit:

"Grounds for removal of tenants

"1. No landlord shall remove a tenant from any housing accommodation covered by section two hundred fourteen of this article, or attempt such removal or exclusion from possession, notwithstanding that the tenant has no written lease or that the lease or other rental agreement has expired or otherwise terminated, except upon order of a court of competent jurisdiction entered in an appropriate judicial action or proceeding in which the petitioner or plaintiff has established one of the following grounds as good cause for removal or eviction" (Real Property Law § 216 [1] [emphasis added]).

Certainly it appears the legislature envisioned that the "appropriate judicial action or proceeding" would in some instances include a nonrenewal holdover after expiration of the tenant's natural term inasmuch as the legislature amended Real Property Law § 226-c, the statute providing the required time frame for a nonrenewal of tenancy notice, to state that such notices must specify if the apartment is subject to good cause (L 2024, ch 56, § 1, part HH, § 2). However, it is by no means evident from the plain language of the statute that the legislature believed a nonrenewal holdover, which requires 90-days' notice of nonrenewal for tenancies of over two years' duration, was the necessary or appropriate means of effectuating an eviction{**85 Misc 3d at 562} for every good cause ground within Real Property Law § 216. For instance, the statute authorizes removal for nuisance (Real Property Law § 216 [1] [c]), a cause of action so urgent that it does not require a 10-day notice to cure, which the court presumes the legislature did not conceptualize would normally be filed as a nonrenewal [*5]case.

With respect to removal of a GCEL tenant based on nonpayment, the first ground listed in the statute for removal, it is only authorized where: "The tenant has failed to pay rent due and owing, provided however that the rent due and owing, or any part thereof, did not result from a rent increase which is unreasonable" (Real Property Law § 216 [1] [a] [i]). The statute does not state that a nonrenewal holdover is the appropriate means of removal for nonpayment, nor is there any indication that the legislature sought to act in derogation of RPAPL 711 (2)'s long-standing mechanism for enforcing a default in the obligation to pay rent. It is equally plausible that in listing nonpayment as the first ground for removal, the legislature was merely reiterating the fundamental principle that a tenant may be removed from possession if they fail to pay the rent due, even if they are protected by GCEL. In doing so the legislature provided that such proceeding cannot be based on an unreasonable rental increase, effectively codifying a rent overcharge defense to a nonpayment.^[FN3]

To the extent the plain language of Real Property Law § 216 (1) (a) (i) is ambiguous, it is a fundamental principle of statutory interpretation that "when the statutory language at issue is but one component in a larger statutory scheme, it must be analyzed in context and in a manner that harmonizes the related provisions and renders them compatible" (Matter of Mestecky v City of New York, 30 NY3d 239, 243 [2017] [internal quotation marks and citations omitted]). In the case of GCEL, the statute exists within a broader landlord-tenant framework{**85 Misc 3d at 563} that includes article 7 of the RPAPL and article 7 of the Real Property Law. One significant provision of the Real Property Law is section 235-b, the statutory warranty of habitability, which obligates a landlord to maintain the leased premises in good repair and free of any "conditions which would be dangerous, hazardous or detrimental to their life, health or safety." In vindicating the rights afforded by Real Property Law § 235-b, a tenant's primary "means of persuading the landlord to maintain habitable premises" is through withholding rent and forcing the landlord to bring a nonpayment (Ruppert House Co. v Altmann, 127 Misc 2d 115, 117 [Civ Ct, NY County 1985, Saxe, J.]). This right is impaired when a landlord can simply terminate the tenancy any time there are rental arrears, rather than file a nonpayment with its more generous cure provisions and the ability to litigate warranty of habitability defenses. For this reason, some courts have held that lease provisions allowing for early termination based on nonpayment are void where the tenant can show a viable warranty of habitability defense, since termination in such circumstances is inconsistent "with the public policy [rationale] expressed by the legislature in Real Property Law § 235-b" (Windy Acres Farm, Inc. v Penepent, 40 Misc 3d 63, 66 [App Term, 2d Dept, 9th & 10th Jud Dists 2013]).^[FN4] By a similar token, allowing a nonrenewal holdover, the functional equivalent of a for cause early termination holdover, against a rent-regulated GCEL tenant solely because they owe rent would chill their ability under Real Property Law § 235-b to withhold based on serious health and safety conditions for fear of termination, especially given that a warranty of habitability defense is generally not a cognizable defense to a nonrenewal holdover (see Blumenthal v Chwast,{**85 Misc 3d at 564} 2003 NY Slip Op 50029[U] [App Term, 1st Dept 2003]). Insofar as Real Property Law §§ 216 and 235-b exist within the same statutory framework, they should be interpreted in a manner that avoids such a fundamental conflict, which is best accomplished by a blanket rule rejecting the viability of such proceedings.

Limiting the removal of a GCEL tenant based solely on outstanding rental arrears to a nonpayment proceeding is also more consistent with the statutory scheme embodied within the RPAPL, which sets forth the governing procedures for summary proceedings. This includes the requirement to serve a 14-day rent demand before commencement of a nonpayment providing a good-faith approximation of the amount owed for the relevant period in dispute (see RPAPL 711 [2]; ShopRite Supermarkets, Inc. v Yonkers Plaza Shopping, LLC, 29 AD3d 564 [2d Dept 2006]). Besides allowing for the early preparation of defenses, the rent demand affords the tenant the possibility of avoiding eviction altogether and the stresses associated with traveling to Housing Court by promptly paying the rent sought, an option that is not available in a nonrenewal holdover. Even after commencement, tenants in nonpayment proceedings can pay the arrears prior to the first court date to render the proceeding moot (RPAPL 731 [4]) or pay the full rent due at any time postjudgment to avoid eviction (RPAPL 749 [3]). Affording GCEL-covered tenants the benefits of these more liberal cure provisions, specifically envisioned by the legislature as warranted in connection with nonpayment proceedings, more effectively effectuates the long-standing legislative preference against avoiding the needless forfeiture of rent-regulated tenancies, which should now include GCEL tenants (see Park Summit Realty Corp. v Frank, 107 Misc 2d 318, 324 [App Term, 1st Dept 1980] [Concluding in the analogous rent-stabilization context that a nonpayment rather than a holdover based on rental arrears is "more in harmony with the legislative intent of the Rent Stabilization Law to afford the stabilized tenant the opportunity to cure a rent default which [*6]often may be the result of an oversight easily remedied"], affd 84 AD2d 700 [1st Dept 1981], affd on other grounds 56 NY2d 1025 [1982]).^[FN5]{**85 Misc 3d at 565}

Conclusion

In sum, in order to best harmonize the grounds for removal in GCEL with the overarching statutory framework for summary eviction proceedings embodied within RPAPL 711, 731 and 749, and the statutory right of a tenant to withhold based on a landlord's breach of the warranty of habitability as codified in Real Property Law § 235-b, and in the absence of an unequivocal statement from the legislature that they intended to deviate from the traditional procedure for eviction based on nonpayment, the summary remedy for enforcing a routine failure to pay rent against a GCEL tenant must remain via a nonpayment proceeding, not a nonrenewal holdover.

In reaching this conclusion the court is not suggesting that there are never circumstances where termination of a GCEL-protected tenancy may be appropriate based on a persistent refusal to pay rent. In the analogous context of rent-stabilized housing, the courts have determined that a chronic rental delinquency constitutes a substantial breach of the implied terms and obligations of the tenancy sufficient to warrant a forfeiture (see e.g. Adam's Tower Ltd. Partnership v Richter, 186 Misc 2d 620, 621-622 [App Term, 1st Dept 2000]). A GCEL ground for eviction based on substantial breach may offer a similar pathway for redress (Real Property Law § 216 [1] [b]). However, such proceedings normally require pleading and demonstrating not merely a default in payment but a "history of repeated nonpayment proceedings brought to collect chronically late rental payments" (31-67 Astoria Corp. v Cabezas, 55 Misc 3d 132[A], 2017 NY Slip Op 50432[U], *2 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2017]), which petitioner did not allege or establish here, as it merely demonstrated there was a default in payment for three months of rent due under respondent's then-in-effect lease before it elected to not renew.^[FN6]

{**85 Misc 3d at 566}Accordingly, for the foregoing reasons, petitioner has failed to state a cause of action for eviction in this nonrenewal holdover subject to GCEL based solely on the nonpayment of rent. Petitioner's request for a judgment after inquest is denied, and the petition is dismissed without prejudice pursuant to CPLR 409 (b).