You Cannot Renew a Lease Into the Past: A Backdated Renewal Offer Defeats a Martin Act Holdover

Aero Mgt. Co. v Moghadasian, 2024 NY Slip Op 34062(U) (Civ Ct, Queens County, Nov. 20, 2024)

By Bikram Singh, Esq. | Singh & Rani LLP

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Four years after the same landlord's first holdover proceeding against the same tenant was dismissed for a pleading defect, the case came back — properly pleaded this time — and was dismissed again, on entirely different grounds. On November 20, 2024, Civil Court, Queens County (Kimon C. Thermos, J.H.C.) held that a renewal lease offer with a retroactive commencement date is invalid, and that without a valid offer there can be no failure-to-renew holdover against a Martin Act tenant.

Bikram Singh of Singh & Rani LLP represented the tenant in both proceedings.

Round Two

The subject apartment sits in a converted cooperative in Forest Hills. The landlord was the sponsor of the conversion and holds unsold shares; our client is a non-purchasing tenant who has lived there more than thirty years.

The landlord's 2019 proceeding was dismissed in May 2020 for failing to plead that the tenancy was subject to the Martin Act, and the Appellate Term affirmed in 2022 (Aero Mgt. v Moghadasian, 74 Misc 3d 132[A]). This time the petition said so expressly.

The relevant chronology:

• July 17, 2017 — The last executed agreement: a month-to-month lease commencing September 1, 2017 at $2,000, with the landlord agreeing not to raise the rent for twelve months.
• January 14, 2019 — The landlord offers a new month-to-month agreement, commencing September 1, 2018 — more than four months earlier — at $2,700. That is a 35% increase. The offer is never executed.
• July 2023 — The landlord commences this holdover on a ninety-day termination notice.

At trial the parties agreed there were no issues of fact, stipulated to four questions of law, and submitted the case for summary determination under CPLR 409 (b).

How the Four Questions Came Out

This was not a clean sweep, and the decision is more useful for it.

1. RPL § 226-c notice — landlord complied

The court first rejected the landlord's threshold argument that RPL § 226-c does not reach co-ops. The 2021 amendment exempts notice by a cooperative housing corporation to a tenant who is a dwelling unit owner or shareholder (RPL § 226-c [1] [b]). Neither applied: the petitioner is the sponsor and holder of unsold shares, not the corporation, and our client is a non-purchasing tenant, not a shareholder. The exemption does not cover sponsors.

On the merits of the notice, however, the court found compliance. The landlord served a ninety-day notice well after the HSTPA's passage, stating it was terminating because the tenant had not signed the renewal offer. The court distinguished SH 333 LLC v South, 2024 NY Slip Op 30591(U) (Civ Ct, NY County), where the landlord served no termination notice at all. The court also noted that because the expired agreement was month-to-month with no fixed term, any termination notice had to satisfy RPL § 232-a — and this one did.

2. Absence of an end date — offer still valid

The court held that a month-to-month offer is not invalid merely for lacking a fixed term. A non-purchasing tenant is protected under GBL § 352-eeee (2) (c) (ii) from eviction for any other reason applicable to expiration of tenancy, and a month-to-month lease containing a twelve-month freeze on increases affords no fewer rights than a one-year lease. Nothing in the Martin Act requires a lease offer to run for a fixed duration. The Act imposes two constraints only: increases may not be unconscionable, and eviction must be for cause.

3. Retroactivity — the offer fails

This is the holding worth reading closely, because the court was writing on a blank slate.

The Martin Act does not itself list failure to renew as a ground for terminating a non-purchasing tenancy. The Appellate Term, Second Department, has read the statutory phrase covering a similar breach of the tenant's obligations to the owner to encompass refusal to sign a renewal lease (MMB Apartments, LLC v Guerra, 45 Misc 3d 132[A] [App Term, 2d Dept 2014]). Guerra implies two requirements: the renewal rent must not be unconscionable, and the renewal lease must be "proper."

Guerra never defined "proper," and the court could locate no other decision addressing what makes a renewal lease proper in a Martin Act tenancy.

So it reasoned by analogy. Under the Rent Stabilization Code, a renewal must be offered 90 to 150 days before expiration; where the landlord is late, the tenant chooses whether the renewal commences on the date it would have if timely, or on the first rent payment date at least 90 days after the offer, and the increase cannot take effect until 90 days after the offer (9 NYCRR 2523.5, 2523.5 [c] [1]).

The court declined to import the RSC's timing requirements wholesale — the RSC is a far more comprehensive scheme, and the Legislature has shown no intent to impose it on Martin Act tenancies (Thirty v Grobman). But it drew the underlying principle: a lease may be backdated, and a retroactive increase applied, only if the tenant elects to accept that (KSB Broadway Assocs., LLC v Sanders, 191 Misc 2d 651 [App Term, 1st Dept 2002]).

Here the landlord offered a renewal more than four months after the prior agreement expired, commencing four months in the past. A valid offer would have commenced after it was made, or given the tenant the choice of start date. The retroactive commencement date rendered the offer invalid — and without a valid lease offer, the landlord could not maintain a failure-to-renew holdover.

The proceeding was dismissed under CPLR 409 (b).

4. Unconscionability — not reached, but instructive

Having invalidated the offer, the court did not decide whether the 35% increase was unconscionable. Its observations are nonetheless useful.

Unconscionability under the Martin Act turns on a comparison of rents for comparable apartments (Paikoff v Harris, 185 Misc 2d 372, 377 [App Term, 2d Dept 1999]; GBL § 352-eeee [2] [c] [viii]). And comparability is not a matter of asking rents alone: the statute directs consideration of building services, level of maintenance, and operating expenses. The landlord's submission of a few listings supplied only part of that picture, so a hearing would have been required.

Takeaways

For tenants and their counsel:

• Check the commencement date against the offer date. A renewal that starts in the past, imposing months of retroactive increases, is vulnerable — and if the offer fails, the entire failure-to-renew holdover fails with it.
• The § 226-c co-op exemption does not shield sponsors. A holder of unsold shares is not a cooperative housing corporation, and a non-purchasing tenant is not a shareholder.
• Demand real comparables on unconscionability. Listings alone do not address services, maintenance, or operating expenses.

For landlords and their counsel:

• Date the renewal forward. Offer it before expiration, or start it after the offer — or expressly give the tenant the choice of commencement date.
• Do not rely on the absence of a fixed term as a defect or a defense. The Martin Act does not require one.
• Serve a termination notice. The notice here saved the landlord on question one; its absence sank the landlord in South.
• Build the comparability record early if an increase of this magnitude is in play.

A Note on Scope

This is a trial-level decision and, as an unreported slip opinion, is persuasive rather than binding. Its analysis of what makes a renewal lease "proper" under the Martin Act appears to be the first of its kind, and practitioners should confirm whether it has been reviewed or followed since.

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Singh & Rani LLP represents tenants and landlords in Housing Court, Civil Court, Supreme Court, and on appeal throughout New York City, including co-op conversion and Martin Act matters, rent stabilization, and holdover litigation. Bikram Singh represented the tenant in Aero Mgt. Co. v Moghadasian. If you are a non-purchasing tenant facing a renewal demand or a holdover, the terms and timing of the offer matter.

Singh & Rani LLP 5 Penn Plaza, 19th Floor New York, NY 10001

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Attorney Advertising. This article is for general informational purposes only, does not constitute legal advice, and does not create an attorney-client relationship. Prior results do not guarantee a similar outcome. Each matter turns on its own facts and applicable law.

Related: What the Petition Doesn't Say Can Sink the Case: Pleading Martin Act Status in a Co-op Holdover