Edelstein LLC v Rodriguez

Holding The court denied the petitioner’s motion to strike the respondents’ ‘sham cooperative’ defenses, finding that the building’s operation as a for-profit rental property may negate the cooperative exemption from rent stabilization. The court granted the respondents’ motion for leave to conduct discovery, determining that the petitioner has constructive possession of the relevant documents and that the respondents have established ample need for the information.

The court’s words

a dissolved cooperative is not a cooperative and thus is not entitled to an exemption under the [Rent Stabilization Law]

89 Misc 3d 953, at the official text

Housing Court may determine whether a purported cooperative is in reality a de facto for-profit rental building, designated as a cooperative in name only to evade the strictures of rent regulation

89 Misc 3d 953, at the official text

the cooperative exemption from rent stabilization is not a one-way ratchet such that a bona fide conversion might excuse in perpetuity de facto operations inconsistent with cooperative principles

89 Misc 3d 953, at the official text

Tenants have the right to have their claims adjudicated, and to have a court look past the fact that the rental agreement form may say ‘sublease’ and into the substance of whether the building is a ‘sham’ co-op

89 Misc 3d 953, at the official text