If you wait by the river long enough…$450K Buyout for Tenant with No Litigation
August 31, 2023
I represented a residential tenant who was in an apartment that was being treated as free market. The tenant came to me, not because he suspected he was Rent Stabilized, but because the new owner of the building was doing some illegal Airbnb, which was bothering the tenant and his family. Getting the new owner to cease the illegal Airbnb was easy enough. Getting the tenant to believe he was Rent Stabilized was more difficult.
The tenant was not a litigious type and had no interest in fighting with his landlord. So, we did not fight with his landlord. All I did was send a letter explaining that this tenant was undoubtedly Rent Stabilized (he was) and demanding a lump sum price for the tenant’s vacatur, or in the alternative, asking the landlord to treat the tenant as Rent Stabilized. Either would have been a good result. A meeting between landlord and tenant was held but was unproductive. But that was the end of it – for five years. Radio silence from the landlord after that. The tenant paid his rent on time, the landlord made repairs, and neither side brought up Rent Stabilization or buyouts. It was détente.
Many tenant lawyers file suit against the landlord when the tenant is either trying to force an apartment into Rent Stabilization or when the tenant is trying to get a buyout. Every situation is different and, here, I saw no reason for an expensive and stressful lawsuit. The tenant was happy in the apartment for the time being and the landlord was not threatening litigation. Why would the landlord start a case? Doing so would signal to the marketplace that this free market apartment might not be free market. Similarly, if I started the case, I would be broadcasting the same thing, and thereby lowering the value of the asset, and with it, my client’s chances of a good buyout. By not filing suit, I was making my client’s vacatur more valuable, because his exit would leave behind no trace of the shadow on the unit’s regulatory status. After all, the apartment sat there with no one questioning its status for nearly 50 years (until I came along).
I knew the landlord (or the next owner) would come to us when they were ready to make a deal. There is an old proverb: “If you sit by the river long enough…you will get the buyout you are looking for…” OK I changed it a little.
One day a new owner appeared, represented by an opposing counsel that I cross paths with a lot. Opposing counsel called and asked how much we really wanted. After two phone calls, we settled on $450k and six months free rent. Everyone was happy.