Sapp v. Clark Wilson, Inc., 2022 NY Slip Op 04184 (2022)

Citation: Sapp v. Clark Wilson, Inc., 2022 NY Slip Op 04184 (2022)
Parent Document: Sapp v. Clark Wilson, Inc., 2022 NY Slip Op 04184 (2022)
Jurisdiction: New York (state)
Effective Date: 2022-06-29
Original Source: https://www.courtlistener.com/opinion/6620002/sapp-v-clark-wilson-inc/ ↗

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As to that dispositive issue, "[a]n illusory tenancy is defined generally as a residential leasehold created in a person who does not occupy the premises for his or her own residential use and subleases it for profit, not because of necessity or other legally cognizable reason" (Matter of Badem Bldgs. v Abrams, 70 NY2d 45, 52-53 [emphasis added]). An illusory tenancy scheme exists, for example, where the "prime tenant" rents a rent-stabilized apartment, which it never intends to occupy, and then subleases it for an amount in excess of the legal rent so as to make a profit (Matter of 333 E. 49th Partnership, LP v New York State Div. of Hous. & Community Renewal, 165 AD3d 93, 103; see Matter of Partnership 92 LP & Bldg. Mgt. Co., Inc. v State of N.Y. Div. of Hous. & Community Renewal, 46 AD3d 425, 429, affd 11 NY3d 859; Primrose Mgt. Co. v Donahoe, 253 AD2d 404, 405; Matter of Avon Furniture Leasing v Popolizio, 116 AD2d 280, 284). Additionally, an illusory tenancy might exist where "an alter ego of the owner rents an apartment as the 'tenant' and then 'sublets' to an innocent third party in an effort to stockpile vacancies or subscriptions for a conversion to cooperative or condominium ownership" (Manocherian v Lenox Hill Hosp., 229 AD2d 197, 205). In such cases, the prime leases are nothing more than a contrivance with no [*3]legitimate purpose, and thus, are not entitled to legal recognition. Although illusory tenancy schemes may take different forms, "[a] case presenting the issue of illusory tenancy requires that the court examine the bona fides of the tenancy of the person [or entity] asserted to hold the status of prime tenant over the party in occupancy as subtenant" (Bruenn v Cole, 165 AD2d 443, 447).

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