B. Holdover Proceedings Holdover Proceedings

• Jurisdiction: New York

B. Holdover Proceedings

A holdover proceeding is maintainable against a tenant who remains or continues in possession of the premises after the expiration of his or her lease term.⁸⁰³ Holdover and nonpayment proceedings have different consequences with respect to the termination or continuance of the landlord-tenant relationship. A petitioner-landlord's commencement of a holdover proceeding ostensibly manifests a desire to terminate the tenancy, whereas the commencement of a nonpayment proceeding "evinces an intent and desire by the petitioner-landlord to maintain the existing landlord-tenant relationship, provided that the delinquent tenant extinguishes his or her arrears liability and can continue to pay the current rent as it comes due." ⁸⁰⁴

Unlike a nonpayment proceeding, which cannot be commenced until three months have elapsed following a tenant's death,⁸⁰⁵ a landlord need not wait before commencing a holdover proceeding after a tenant's death.⁸⁰⁶ Also, a representative of the estate of a deceased tenant is not "a necessary party" to a licensee holdover proceeding seeking to evict a remaining occupant if the tenant's lease has expired. ⁸⁰⁷

Courts consider holdover and nonpayment proceedings to be inconsistent and mutually exclusive remedies,⁸⁰⁸ but recently courts have allowed them to be pleaded in the alternative.⁸⁰⁹ When a landlord simultaneously commences a nonpayment and holdover proceeding, courts generally discontinue the nonpayment proceeding.⁸¹⁰ In Glenbriar Co. v. Nesbitt,⁸¹¹ the commencement of a nonpayment proceeding before the lease termination date specified in a Golub notice and prior to the institution of a holdover proceeding was held not to vitiate the Golub notice or to require dismissal of the holdover proceeding where the landlord immediately sought to discontinue the nonpayment proceeding once the lease expired. The court stated that the landlord was within its rights to exercise both proceedings because it was not the legislature's intent to deny landlords the right to recover rent due during the 150 days before terminating the tenancy.⁸¹² However, a landlord's prosecution of a nonpayment proceeding after terminating the tenant's lease in connection with a holdover proceeding will vitiate the cure and termination notices on which the holdover proceeding is based.⁸¹³ A landlord may obtain a money judgment for unpaid rent or use and occupancy, however, if that relief is requested in the pleadings and if the court has personal jurisdiction over the respondent. ⁸¹⁴

1. Holdover Proceedings Against Tenants

To evict a tenant in a holdover proceeding, a landlord must show that the tenant remains in possession of the premises, after the termination of any lease or tenancy, without the landlord's consent.⁸¹⁵ Various events can trigger termination, including the expiration of an unregulated lease, the tenant's violation of law, or the tenant's breach of a substantial obligation of the tenancy. Because the consequences of a lease forfeiture are harsh, courts require, particularly in the context of a rent regulated tenancy, that a breach be shown to constitute a "significant departure" from a substantial obligation of the tenancy.⁸¹⁶ Parties may provide in the lease that a particular tenancy obligation is to be considered substantial and courts will generally enforce such a provision. ⁸¹⁷ However, a lease labeling particular tenant obligations as "substantial" may lead to a judicial finding that other provisions are insubstantial. By contrast, court stipulations stating that nothing in the stipulation is de minimis are generally enforced in full.⁸¹⁸

If the premises are not subject to rent regulation and the lease has expired, the landlord may elect not to renew the lease without cause and seek the tenant's eviction in a holdover proceeding. Commonly referred to as "no-grounds" or "no-defense" holdover proceedings because the only ground the petition must allege is that the term expired, these proceedings are based solely on the expiration of the lease and the landlord's assertion that the unit is not rent-regulated.⁸¹⁹ Effective October 12, 2019, HSTPA creates a new regime of termination notices, required whether or not the landlord has accepted rent after a fixed term, the length of which, 30, 60, or 90 days, is determined by the length of the tenancy.⁸²⁰ In particular, a 30-day termination notice must be given as a predicate to commencing a no-grounds holdover only when a landlord accepted rent after the lease expired, thus creating a month-to-month tenancy.

Although tenants have no substantive defenses to a no-grounds holdover if the petition complies with the statutory requirements and the landlord follows proper procedures in serving predicate notices (when required) and the petition and notice of petition, the tenant may defend on the ground that the unit is rent-regulated. This is because the petitioner must plead and prove the correct regulatory status of the premises and, if applicable, the petitioner's compliance with the governing rent-regulation laws.⁸²¹ The court's determination whether the unit is rent regulated will be based on facts before the court and applicable law, not on the unit's registration status ⁸²² or mistaken assumptions by the landlord.⁸²³ The tenant may also defend a "no-defense" holdover on grounds of retaliatory eviction and, for use and occupancy issues, on constructive eviction and breach of the implied warranty of habitability.⁸²⁴

If a tenant prevails in a no-grounds or no-defense proceeding based on defects in the petition or the landlord's failure properly to serve a predicate notice or the notice of petition and petition, the dismissal will cause limited delay, but the landlord will be able to correct these defects and commence a new proceeding.

A holdover proceeding may be brought against a rent-regulated tenant if the tenant commits "wrongful acts."⁸²⁵ One such wrongful act occurs when the tenant breaches a substantial obligation of the tenancy.⁸²⁶ In the case of a rent-regulated tenant, the landlord must show both that the tenant violated a substantial obligation of the tenancy and that the violation was significant.⁸²⁷ A landlord's failure to offer a renewal lease does not preclude it from commencing a holdover proceeding based on the tenant's breach of a substantial obligation of the expired lease. ⁸²⁸

However, not all holdover proceedings against a rent-regulated tenant are based on the tenant's wrongful acts. A holdover can also be brought against a rent-stabilized tenant based on certain enumerated statutory grounds, provided that the landlord timely gives the tenant written notice of nonrenewal. ⁸²⁹

With the exception of no defense holdover proceedings, in which a lease for a non-regulated tenancy has expired and the tenant remains in possession, holdover proceedings are premised on the purported termination of the tenancy by the landlord either by common law, statute, or under the lease. For example, a tenant's persistent failure to pay the rent on time may give rise to a chronic nonpayment proceeding based on common law,⁸³⁰ although some modern leases now address this.

2. Grounds for Holdover Proceeding Against Tenants—Breach of a Substantial Obligation of the Tenancy

Holdover proceedings are often based on an alleged breach of the lease or a substantial obligation of the tenancy. Procedurally, before such a proceeding may be commenced, most leases require that the tenant be given notice of the breach and an opportunity to cure, followed by a notice of termination if the tenant fails to cure within the prescribed time period. For rent-stabilized and rent-controlled apartments, the landlord is statutorily required to give a notice to cure and a notice of termination to the tenant.⁸³¹

a. Unauthorized Sublets

A sublease is defined as a "transfer by a tenant of . . . part of his estate or interest in the whole, or in a part of the leased premises."⁸³² Included in this concept of a sublet is a sub-sublet, where the subtenant again sublets the apartment. Such a subleasing is subject to the continued estate of the overtenant, which, if surrendered, makes the erstwhile sublet now a direct tenant. If the tenancy is terminated, the erstwhile subtenant becomes an unauthorized holdover.⁸³³

Under RPL § 226-b(2), a tenant in a building with four or more residential units has the right to sublease with the owner's advance written consent, which may not be unreasonably withheld. The tenant must inform the landlord of the intent to sublease by mailing a notice of that intent by certified mail, return-receipt requested, and including information about the term of the sublease, the name of the sublessee, the business and permanent home address of the proposed sublessee, the tenant's reason for subletting, the tenant's address for the sublease term, the written consent of any co-tenant or guarantor of the lease, and a copy of the proposed sublease. Within 10 days of the sublet application, the landlord may then request additional information and has 30 days after the additional information is provided to notify the tenant whether it will approve the sublease.

A landlord that does not request additional information within 10 days has 30 days from the date the sublet request is made to approve or deny the request. In either case, if the landlord fails to respond within the applicable 30-day time frame, the landlord will be deemed to have approved the sublet. If a landlord unreasonably withholds consent, the tenant may sublet in accordance with the request,⁸³⁴ and a holdover proceeding based on a claim of illegal sublet will be dismissed.⁸³⁵ Although a tenant may recover attorney fees and costs if the landlord acts in bad faith in withholding consent, compensatory damages are not available to a tenant for a landlord's breach of the statutory duty to allow a sublet.⁸³⁶ In a building with fewer than four residential units, the Sublet Law is inapplicable and...