A. Market Rentals Market Rentals
| Jurisdiction | New York |
A. Market Rentals
Most residential rentals result from arm's-length transactions between the owner and the real property's occupant. The transaction results in a lease that sets forth the tenancy's terms. Market rent is the rent a willing tenant will pay and a willing landlord will accept in the public marketplace, absent a statute or a contractual provision stating otherwise.68 Common-law principles applicable to landlord-tenant relationships govern these tenancies. Landlords have the power to fix the amount of the rent in their sole discretion, unless some statutory or contractual limitation exists.69
Although oral leases and rental agreements for terms of a year or less are enforceable against the parties to the agreement, any oral tenancy with a term in excess of a year is void under the Statute of Frauds and vests no term at all in the lessee.70 However, a tenant's substantial partial performance71 takes the agreement out of the Statute of Frauds and renders enforceable an oral agreement that would otherwise be barred by the Statute of Frauds.72 In order to take the tenancy out of the Statute of Frauds, the partial performance must be "unequivocally referable" to the purported agreement.73 Initially, a tenant in possession under a void lease gives rise to a tenancy at will.74 Upon payment of rent, however, that tenancy may be converted into a periodic tenancy.75 For this reason, and because oral rental agreements are difficult to prove in the event of a dispute, it is advisable to memorialize the terms of the tenancy in writing. It is debatable whether a lease should be considered a business record for purposes of the business record exception to the hearsay rule or whether it is purely contractual in nature, but an original, authenticated lease is always admissible, regardless of its academic categorization.76 Under certain circumstances, courts have applied equitable principles in refusing to permit the Statute of Frauds to be relied upon to perpetuate a fraud.77
Leases vary from "form" leases, like those prepared by the Real Estate Board of New York and the Blumberg/Excelsior Publishing Company, to leases drafted and negotiated to meet the requirements of the particular parties to the transaction and the nature of the rental property. But some key provisions, outlined below, are found in most leases.
A residential lease must be written in a clear and coherent manner using words with their common, everyday meanings and be divided and captioned by section.78 A residential lease clause that is not legible or is in a type of font smaller than eight points in height is invalid.79 An owner who violates this requirement is liable for the "amount equal to any actual damages sustained plus a penalty of fifty dollars."80 Courts have the statutory authority to refuse to enforce a lease or lease clause that was unconscionable when it was made.81
A written lease is presumed to contain the entire agreement between parties. Evidence of any oral agreement made before or contemporaneously with execution of a fully integrated lease is inadmissible.82
Where the lease is on a form provided or substantially prepared by the landlord, ambiguities in the terms of the lease will be construed against the landlord.83 A lease containing a provision authorizing the premature cancellation of the lease by the landlord is to be strictly construed in the tenant's favor.84
Oral agreements purporting to modify the rental obligations set out in a written lease are not enforceable when the lease contains merger and no-oral-modification clauses.85 Parol evidence is admissible to show that there was fraud or mistake in entering the agreement86 or to give meaning to an ambiguity in the agreement.87 However, "extrinsic and parol evidence is not admissible to create an ambiguity in a written agreement which is complete and clear and unambiguous upon its face."88
1. The Parties
A lease must identify the parties intending to be bound by its terms. Any person with the legal capacity to contract may enter into a lease, although, in practice, only competent adults may act as parties to a lease. The landlord-tenant relationship is created by contract, whether express or implied, but the intent to form a contract will not be found if the "acts and conduct" of one of the parties are inconsistent with the contract's existence.89 Minors may legally enter into a lease, but most landlords are loath to enter into a lease with a minor, who may disaffirm a lease within a reasonable time after turning 18 and be relieved from any obligation to perform under its terms.90
Under rent stabilization, a tenant is "[a] person or persons named on a lease as lessee or lessees, or who is or are a party or parties to a rental agreement and obligated to pay rent for the use or occupancy of a housing accommodation."91
In some cases, a group of co-tenants will agree to share the rights and obligations of the tenancy. In these situations, the lease may include a provision making the co-tenants jointly and severally liable for all lease obligations. This means that the landlord may seek recourse against the co-tenants, or against one co-tenant individually, for any default under the lease. Co-tenants may be evicted from the premises for the actions of one, and each of the co-tenants is liable for any rent owed by the others, but they may not evict each other.
In a tenancy-in-common, each co-tenant has an equal right to possess and enjoy each portion of the property.92 The only required unity between co-tenants is a unity of possession, not a unity of interest.93 Thus, the terms of the co-tenants' tenancies need not be coextensive. Tenants in common do not relinquish any right to possession, even though other co-tenants might assume that they are in exclusive possession of the premises, to the exclusion of all other co-tenants.94 The common law, now codified by statute,95 presumes that one co-tenant's possession is for the benefit of all the other co-tenants, unless the co-tenant in possession commits an act or acts constituting an ouster.96 This common-law presumption ceases after 10 years of exclusive occupancy by the co-tenant in possession.97 Absent an ouster, therefore, a co-tenant may begin to hold adversely only after 10 years of exclusive possession.98
Mere occupancy by one of the co-tenants does not make that co-tenant liable to the other co-tenants for use and occupancy absent an agreement to that effect or an ouster.99 Moreover, because no landlord-tenant relationship exists between co-tenants, one co-tenant cannot maintain a summary proceeding to remove another co-tenant.100 Tenants in common may convey their interest without the consent of their co-tenants and, upon the conveyance, the assignee becomes a tenant in common with the other co-tenants.101 However, one tenant in common may not enter into a renewal lease binding on the other co-tenants without their consent102 or lease the premises so as to affect the others' rights to possession without the others' consent.103 When a property is owned or leased by tenants in common, the co-tenants may maintain a summary proceeding in their own name against any non-tenant occupant,104 but the proceeding may only be maintained if the occupant has not been given permission to remain in the premises by another co-tenant.105
A co-tenant differs from a roommate. A roommate is not a party to the lease, although, under RPL § 235-f (the Roommate Law), a landlord is barred from limiting occupancy to the named tenants on the lease, and any lease provision that attempts to do so is null and void. A roommate is a permitted occupant,106 and a roommate arrangement, unlike a sublease arrangement, generally entails shared access to common areas of an apartment with no subdivision or partitioning of the demised space.107
The Roommate Law does not create "an affirmative right of action for landlords to enforce occupancy limitations."108 However, a landlord may enforce a lease clause setting reasonable occupancy limits consistent with the statute.109 The total number of occupants in the premises is subject to restrictions based on the number of occupants permitted under the lease and on local overcrowding laws.110 A landlord may not bring a proceeding for overcrowding unless the municipality has issued a violation for such overcrowding. 111 To invoke the Roommate Law, the tenant or the tenant's spouse must occupy the premises as a primary residence.112 Within 30 days after a roommate moves in, or at the landlord's written or oral request, the tenant must notify the landlord of the names of any occupants in the premises.113
Leases frequently address a tenant's right to sublet the leased premises or to assign the lease. In buildings with fewer than four units, landlords may, without cause, reject a tenant's request to sublet the premises. In buildings with four or more units, a landlord must be able to demonstrate a valid, non-discriminatory justification to deny a request to sublet.114 A rent-stabilized tenant may not sublet for more than a total of two years out of the four-year period preceding the termination date of the proposed sublease.115
Landlords may legally refuse, with or without cause, to consent to a lease assignment. If the refusal is without cause, the tenant is entitled to be released from the lease on 30 days' written notice.116
The requirements placed upon tenants under RPL § 226-b are exacting. Tenants must be punctilious in observing the requirements of the statute to avoid denial by the landlord.
If a landlord has agreed that it will not unreasonably withhold its consent to assign a lease, its refusal can be based only on objective factors, such as the proposed assignee's suitability for the particular building.117
2. The Premises
The lease should contain a description that reasonably identifies the property being rented, including a full address and, if the tenant's use requires some minimal area, the...
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