As the city of New York seeks to phase out its use of rent-stabilized apartments as shelters for homeless people,1 the organizations that administer this program struggle for funding, and the courts struggle to find the correct theoretical framework to determine if the units are still rent stabilized and, once the homeless persons are replaced with conventional tenants, what legal category into which to place the new occupants. The race is on. With homeless populations continuing to swell2 and charitable organizations looking to help house them, a thorough understanding of the applicable principles of rent stabilization is becoming increasingly essential. The recent decision of the Appellate Term, First Department in 2363 ACP Pineapple v. Iris House3 highlights practitioners’ misunderstanding of the theoretical issues.
In Pineapple, in under 1,000 words, the Appellate Term for the First Department ruled in a case where at the behest of the city, a private landlord rented premises to a city-funded program for the temporary housing of homeless persons. Assured that such units were exempt from rent regulation, at the conclusion of the lease, the landlord sought to evict the occupants, using one of the charitable-use exceptions to rent stabilization. The court refused to allow it.
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