(This story, in slightly different form, originally appeared inthe New York LawJournal.)

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NEW YORK CITY-A stipulation in which a couple agreed to payhigher-than-legal rent in return for their landlord allowing themto remain in a rent-stabilized apartment that was not their primaryresidence was declared void and unenforceable yesterday by theCourt of Appeals. The 1996 apartment stipulation stated thattenants Victoria Munroe and Eric Saltzman would pay $2,000 a monthfor their rent-stabilized apartment at 155 Riverside Dr. onManhattan's Upper West Side, or $675 a month more than the legalrent on the dwelling. The apartment, actually three adjacentapartments consolidated into one by the tenants, was then to beheld by the tenants "regardless" of the fact their primaryresidence appeared to be in Cambridge, MA.

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In 2000, the apartment was deregulated. Under the terms of thestipulation, the tenants were offered renewal leases every twoyears with rent increases of 8%, according to the Court's decision,which was written by Judge Robert S. Smith. When a new manager tookover the building for its owners, Riverside Syndicate, evictionproceedings were begun in 2004 to have the 1996 stipulationdeclared void and contrary to the public policy of the RentStabilization Code.

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The Court yesterday unanimously held that §2520.13 of the codestates that a tenant may only be allowed to "waive the benefit" ofthe city's Rent Stabilization Law as part of an agreement towithdraw a complaint before the state Department of Housing andCommunity Renewal. No such complaint before the agency existed, theCourt noted.

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"The application of this regulation to this case seemsuncomplicated," Judge Smith wrote in RiversideSyndicate v. Munroe, 16. "The agreement is, on itsface, one to 'waive the benefit' of rent stabilization, and istherefore void."

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An agreement such as the one over the units at 155 Riverside Dr.are contrary to the public policy considerations underpinning therent stabilization system, the Court held. "It is the policy of therent stabilization laws that apartments should either be rented atno more than the legal maximum or deregulated," Judge Smith wrote."Deregulation, when the conditions for it are met, serves publicpolicy by increasing the availability of housing on the openmarket. Agreements like the one at issue here distort the marketwithout benefiting the people the rent stabilization laws weredesigned to protect."

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Civil Court Judge Saralee Evans had approved the stipulation in1996. In Supreme Court, Acting Justice Judith J. Gishe alsosustained the agreement, but she was reversed unanimously by theAppellate Division, First Department, which held in RiversideSyndicate v. Munroe, 39 AD3d 256 (2007), that it wasillegal to waive the benefits of rent stabilization as provided forin the stipulation.

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Jeffrey Turkel, who represented Riverside, says in an interviewthat it was not a "close or difficult case" to decide against thevalidity of the stipulation. "I think that anyone who practices inthe rent-regulation field would understand that an agreementwhereby a tenant agrees to pay a rent overcharge in exchange for alandlord looking the other way for a non-primary residence isillegal and unenforceable," says Turkel, of Rosenberg &Estis.

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Not every stipulation a tenant and landlord make would be voidunder rent stabilization, says Turkel. For example, no one wouldobject to an arrangement where a landlord who owes money to atenant agrees to have an apartment painted every two years insteadof three years to make up the difference.

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Eric Hecker of Emery Celli Brinckerhoff & Abady representedMunroe and Saltzman. He did not immediately return a call seekingcomment Thursday.

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Joel Stashenko can be reached at [email protected].

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