Inheriting mom’s regulated apartment? Not so fast, say courts

By David M. Skaller
Belkin, Burden, Wenig & Goldman LLP
Rent regulated apartments are often viewed as “inheritance assets” by family members of tenants.
Given the liberal succession provisions in the Rent Stabilization Code, when family members make succession claims after a tenant has moved out or died, an owner usually has little choice but to hand over the keys.
However, in a recent decision by the Appellate Division, First Department, owners were given reason to say “Not so fast!” The Appellate Division in Third Lenox Terrace Associates v. Edwards focused on one of the key perquisites for succession under the rent laws: the family member must prove that she has co-resided with the tenant in the apartment as their primary residence for at least two years immediately prior to the tenant permanently vacating.
The interplay between “primary residence” and “permanent vacatur” was the crucial issue.
In Edwards, the sister of the tenant of record was seeking succession rights to the rent-stabilized apartment in the context of a non-primary residence case brought against the tenant of record. Although it was conceded that the tenant of record had moved out of the apartment years earlier, the date she moved out was not when she “permanently vacated” for purposes of determining whether the sister had succession rights.
Instead, the Appellate Division found that the tenant’s actions after her move precluded the sister’s argument that the tenant had permanently vacated the apartment at the time she moved out.
The tenant of record, despite her move, continued to execute renewal leases and pay the rent via money orders issued in her name. This conduct lasted for seven years.
The Appellate Division drew a distinction between “permanent vacatur” and “non-primary residence.”
Although the apartment was not the tenant’s primary residence since she moved out of the apartment, the tenant, by continuing to execute renewal leases and pay rent, had not “permanently vacated” the apartment.  Accordingly, the sister was not able to establish one of the key criteria for succession; that the tenant was a primary resident of the apartment for at least two years before she permanently vacated.
Because of that the owner was entitled to evict the sister.
This is a landmark case in the succession rights arena in that the Appellate Division had not previously rendered a decision that acknowledged the difference between permanently vacating an apartment versus not occupying the apartment as one’s primary residence.
If the tenant tries to hide the fact that she moved out by executing renewal leases and paying rent, or continues to have other connections to the apartment (such as having the utilities in her name and receiving mail at the apartment), then there may not be a permanent vacatur, which will defeat a third-party’s claim for succession.
Owners facing possible succession claims should, thus, carefully examine the nature of the actual occupancy in the apartment, the physical whereabouts of the tenant of record during the relevant time frame, and whether those facts correspond with who was paying the rent and executing lease renewals during that time frame.