Appellate Panel Finds Brooklyn Court Wrongly Dismissed Landlord’s Petition Relating To A Newly Created Duplex Apartment

Appellate Term, Second Department of New York State Supreme Court
R&E Team: Jeffrey Turkel
Decided November 3, 2021

Rosenberg & Estis, P.C. has prevailed before the Appellate Term, Second Department of New York State Supreme Court, arguing that Housing Court wrongly dismissed a landlord’s non-payment petition.

Jeffrey Turkel, a member of Rosenberg & Estis, argued the case, 222 Stanhope II, LLC v. Chris Bagamery, on behalf of the petitioner-appellant, which owns and rents out the three-story, six-unit apartment building at 222 Stanhope St. in Bushwick, Brooklyn.

Justices David Elliot, Michelle Weston and Donna-Marie Golia unanimously reversed a King’s County Housing Court judge’s order and reinstated the landlord’s petition against Bagamery, the tenant-respondent. The justices remitted the case to Brooklyn Housing Court for a new trial.

The case centers on the trial court’s June 2019 amended order dismissing the property owner’s attempt to recoup $51,466 in back rent in a summary non-payment proceeding initiated by the landlord in 2016. That ruling stemmed from a June 2018 decision by Judge Kevin McClanahan, who rejected the landlord’s argument that the duplex apartment in question was not rent stabilized.

At issue was the landlord’s major renovation of two railroad flats 1R and 1L, which fully transformed the units into duplex apartments. The property owner finished the building’s cellar for recreational uses, divided it in half, added a half-bath to each side and connected each of the two first-floor apartments to the finished cellar space via individual private stairways.

The landlord contends that 1R became exempt from rent stabilization because the improvements created an apartment that did not previously exist.  Because the duplex’s initial rent was $3,000 – higher than the then-deregulation threshold – the apartment was no longer stabilized.

For its part, the Appellate Court reversed the Housing Court for holding that, as a matter of law, the addition of a finished cellar space and a half-bath to a first-floor railroad flat could never create a new apartment under the state Division of Housing and Community Renewal policy. The landlord argued that its substantial altering of the apartment floor plan’s outer perimeter walls fit DHCR’s criteria to lift rent constraints.

The Appellate Term held that because the landlord established at trial its prima facie case that the duplex apartment had been newly created, and the tenant initially leased it at a rent above the deregulatory threshold, the landlord had accurately described the duplex as exempt from rent stabilization in its non-payment petition.