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Retained but returned rent checks don't vitiate notices.

An appellate Court recently distinguished an owner's inadvertent retention of two rent checks, followed by their return to the tenant, from the actual deposit of such checks. As a result, the Court found that the owner's brief retention of two rent checks following the expiration of the tenant's lease had not had the effect of vitiating the owner's prior non-primary residence eviction notices.

Pacer Realty Associates v. Bishop was a non-primary residence holdover proceeding brought by the owner against the tenant predicated upon substantial evidence tying the tenant to a Bel Air, California residence. Notably, the legal conundrum described in this article was procedural in nature only. As seems to all too frequently happen in landlord-tenant matters, the fairly straight forward substantive issue (in this instance, where the tenant primarily lives) becomes lost in the hypertechnical tumult and shouting. Interestingly, throughout the litigation history of Pacer Realty Associates v. Bishop, the tenant has never once explicitly denied the owner's seminal allegation; that is, that the tenant does not maintain the New York apartment as a primary residence.

Rather than addressing the primary residence issue, the tenant had moved to dismiss the holdover petition, asserting that the non-primary residence notice had been vitiated because, following service of the termination of the tenancy (but prior to the service of the eviction petition), the tenant had tendered and the owner had "accepted" two rent checks (in the amount recited in the expired lease). The Civil Court granted the tenant's motion to dismiss predicated upon Judge Debra A. James finding that this "acceptance" of post-termination rent constituted a waiver by the owner.

The owner, represented by Belkin Burden Wenig & Goldman, LLP (Martin Meltzer before the Civil Court and Magda L. Cruz on appeal), brought this matter before the Appellate Term. The owner asserted that the record below demonstrated that the two prongs of the lower court's decision were both erroneous. First, "acceptance" had not occurred; second, "waiver" was inapplicable.

The tenant had tendered two rent checks following expiration on the last rent stabilized lease. The two checks were held by the owner; the first for more than one month, the second for several weeks. Neither check was ever deposited by the owner. Rather, prior to serving the eviction petition, the two checks were returned to the tenant. In addition, the owner demonstrated in the record on appeal, that its then understaffed office had explicit instructions not to accept any tender of rent from this tenant, but that the checks had been inadvertently retained prior to the ultimate rejection. Therefore, the owner had no intention of reinstating the tenancy.

The Appellate Term unanimously reversed, reinstating the holdover petition. As to the alleged "acceptance," the Court found that the return of the uncashed checks, without unreasonable delay following discovery of the clerical error, was an inadvertent act, which did not vitiate the predicate notices to the proceeding. In so holding, the appellate court contrasted these circumstances with an owner that unduly delays or actually cashes the rent checks. By emphasizing the inadvertent error that underlay the owner's brief retention of the rent checks, the Court distinguished those cases relied upon by the lower court based upon the concept of waiver.

A waiver may be found to flow from a knowing or purposeful acceptance of rent. The Appellate Term's finding that the owner's actions constituted mere "inadvertent" conduct would be antithetical to the requisite knowing quality that must be present for a waiver to occur.

It is a general legal axiom that "equity abhors a forfeiture," meaning that the Law recognizes that eviction from one's home is a harsh remedy. However, in straining to avoid harsh results, the Court must also avoid creating unnecessarily hyper-technical obstacles to the owner's rights and remedies from being heard. By its unanimous reversal, the Appellate Term's decision in Pacer Realty advises that unnecessary or unwarranted procedural issues should neither prevent nor delay matters from being adjudicated on their merits.
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Copyright 1997, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Author:Belkin, Sherwin
Publication:Real Estate Weekly
Date:Jan 15, 1997
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