How to Avoid Risks Posed by Tenant-Superintendents
Owners sometimes hire tenants to be superintendents. This practice can lead to serious problems unless the owner takes precautions. When a tenant is hired to act as a superintendent, he becomes the owner’s employee. This is not a problem. But suppose the owner later wants to fire the employee. The owner might discover that the employee retains his rights as a tenant. If the tenant is protected by rent laws, the owner won’t be able to evict the tenant. Thus, the owner will be stuck with a tenant who was a former superintendent and who was fired by the owner.
It doesn’t take much imagination to realize the trouble this situation can cause. An important consideration when hiring a tenant as superintendent is the feasibility of a clean break with the employee and the ability to evict him from the apartment should his employment end on other than good terms. If you follow the guidelines, the owner shouldn’t have to worry about having an irate tenant who knows about every minor violation and fault in the building.
Three Guidelines When Hiring Super
According to Section 2520.11(m) of the Rent Stabilization Code, if an employee lives in one of your rent-stabilized apartments, the apartment is not subject to rent stabilization if the employee:
- Pays no rent;
- Gets to live in the apartment as part or all of his compensation for the job; and
- Works in the building where the apartment is located.
Avoid asking current tenant to become super. You can avoid problems caused by severing an employment relationship with a tenant-superintendent by not hiring a tenant as a super in the first place. Once someone is a rent-stabilized tenant in your building, you can’t cut off his rights by making him the super. He will revert back to his rent-stabilized tenant status when the job ends.
In one case, a super resumed rent-stabilized status when his employment ended. The owner sued to evict him and his family in 2008 after his employment was terminated. The owner claimed that the apartment was exempt from rent stabilization because the super lived there without paying rent. But the super claimed that his family had been rent-stabilized tenants of the apartment before he became super and therefore they reverted to that status when his employment ended. The owner and the super signed a settlement agreement in court by which the owner gave the family a lease at a negotiated first rent of $1,200. The rent had been $240 per month before the super became an employee and paid no rent. In 2011, the owner sued to evict the tenant family for nonpayment of rent. The owner asked the court to rule in its favor without a trial, claiming that the tenants owed $40,000. The court ruled against the owner, finding there were questions of fact about the lease.
The owner subsequently appealed and lost. The owner had failed to allege or prove that the super’s family had agreed to surrender their rent-stabilized status. The super’s wife lived in the apartment as a rent-stabilized tenant before the super became the owner’s employee. Therefore, she was entitled to re-establish her rent-stabilized status when the super’s employment ended. And the court ruled that the lower court properly vacated the prior settlement agreement [329 Union Building Corp. v. LoGuidice, January 2015].
In another instance, an owner sued to evict the building super after the super’s employment was terminated. The super claimed that he was a rent-stabilized tenant and couldn’t be evicted. The court ruled for the super and dismissed the case. The super showed that he had lived in the apartment since 1988 and began working as the super in 1994. The super proved he paid rent at $400 per month to the owner while he was a building employee by submitting copies of 25 money orders paid between September 2009 and February 2017.
The super also submitted copies of receipts for cash payments for rent paid between 2005 and 2007. The super lost his original lease in an apartment fire in 2008, but it was uncontested that he received no pay for his work as a super except for a rent concession, limiting his monthly rent to $400. DHCR records showed that the apartment was registered as rent stabilized from 1984 to 1995 in the name of the tenant’s former wife [Richards v. Barrows, July 2017].
Don’t charge rent. Don’t charge the super rent for the apartment, not even a reduced rent. If the super pays any rent at all, the apartment is subject to rent stabilization. You are better off paying the super less wages in exchange for the apartment rather than charging a reduced rent.
In one case, an owner sued to evict the building super from his apartment after the super’s employment was terminated. The super claimed that he started working at the building in 1999 but soon thereafter was given a different apartment, his job title was changed to janitor, and the owner deducted rent payments from his salary.
The trial court ruled for the owner. But the super appealed and won. The owner had presented no witness with personal knowledge or documentary proof such as an employment contract, board minutes, tax forms, or salary receipts, to prove that the super had moved into his current apartment as an incident of employment rather than as a tenant. And the case was dismissed [350-352 South Fourth Street, HDFC v. Torres, June 2017].
Don’t offer a lease, and document evidence of “Superintendent’s Apartment.” A rent-stabilized tenant who becomes a super and moves into a new apartment loses his tenancy rights only if all or most of the following conditions apply:
- The new apartment is a “superintendent’s apartment”;
- The move to the new apartment was necessary for the performance of the super’s duties;
- The super requested the move;
- There was proof that the super exchanged his status as tenant for that of employee; and
- The super didn’t pay rent for the new apartment.
In one case, an owner sued to evict the building superintendent from an apartment in the building after the super’s employment was terminated. The owner claimed that the super had an employment agreement and was permitted to live in the apartment rent-free as part of his employment. The apartment was rent stabilized but temporarily exempt during the super’s occupancy. The super claimed that he had been a rent-stabilized tenant in another apartment in the building before becoming the super and argued that he should now resume his rent-stabilized status.
The court ruled for the super and dismissed the case. In this case, the super paid no rent. But the owner failed to prove that the new apartment was a “superintendent’s apartment” and that the move was necessary for the super to perform his duties. The owner presented no proof of why the super changed apartments and, according to the super, it was the prior owner who requested the move. There also was no proof that the super exchanged his status as a tenant for that of employee. And there was no proof that the super agreed to give up his tenancy rights in exchange for becoming the super [OLR LBCE LP v. Trottman, February 2014].