NY Appellate Court Upholds Violations For Transient Use of Apartment Building for Advertising Transient Rentals

This post was authored by Amy Lavine, Esq.

The property owner involved in the 2023 case Lexington Assoc., LLC v. City of New York, 222 A.D.3d 458 (1st Dept 12/12/23), sought to annul an administrative determination that sustained charges against it for the unauthorized transient use of its tenement apartment building in violation of its certificate of occupancy, and for illegally advertising the tenement for transient use. The lower court disagreed with the property owner and granted summary judgment in the city’s favor, however, and the First Department affirmed the ruling against the property owner on appeal.

The building at issue had a 1940 certificate of occupancy that listed its occupancy classification as an “Old Law Tenement” with “Single Room Occupancy” units. As the court explained, “tenements” are classified under the New York State Multiple Dwelling Law as Class A dwellings, which are generally limited to permanent occupancy uses, as opposed to Class B dwellings, which permit transient uses such as hotels and lodging houses. The building’s certificate of occupancy did not include a notation as to whether it was Class A or Class B, but the authorization for single room occupancy use established that it had been converted from under the 1939 Pack Law, which allowed the continuance of then-existing single room occupancy units subject to certain conditions related to safety and sanitary conditions. The court concluded that the building was properly deemed a Class A multiple dwelling, based on a previous case in which it was held that a certificate of occupancy for a tenement building with single room occupancies established “by implication” that the building was also a class A dwelling, “because tenements are Class A multiple dwellings.” The court found that the same  reasoning applied in this case, and because the building was a Class A multiple dwelling, the court found that it was subject to amendments to the Multiple Dwelling Law that prohibited rentals for less than 30 days, and it was also subject to the Class A advertising law, which prohibited advertisements for any transient uses.

The property owner opposed the finding that the building was a Class A multiple dwelling. In its first argument it claimed that the building should be deemed Class B based on its description of the use as “Class B, Single Room Occupancy (Pack Bill)” in the application that was submitted for the 1940 certificate of occupancy. But the court disagreed, noting that there was no provision in Pack Law that authorized conversions to Class B transient occupancy in addition to conversions from full apartments to single room occupancies. Next, the court rejected the property owner’s res judicata and preclusion claim, which was based on a previous administrative determination that dismissed a similar charge of violating the certificate of occupancy and found that the building’s authorization for single room occupancy meant that it also allowed Class B transient uses. The court pointed out that it was unclear whether the previous and current violations arose from the same transaction or series of transactions such that res judicata should apply, but even assuming that there was privity, the court explained that precluding the city from prosecuting the current violation would be inconsistent with its statutory mandate to enforce the Multiple Dwelling Law fairly and uniformly across all buildings in the same class. Moreover, the court explained that res judicata did not preclude relitigating whether the certificate of occupancy allowed any Class B transient occupancy, since this was a “pure question of law.”

Lexington Assoc., LLC v. City of New York, 222 A.D.3d 458 (1st Dept 12/12/23)