AND MORE ON ILLEGAL APARTMENTS

This was decided on July 12, 2018 - Hayes v. Ramsey, 2018 NY Slip Op 51114 - NY: Appellate Term, 2nd Dept. 2018:

"Insofar as is relevant to this appeal, plaintiff commenced this small claims action to recover, among other things, the sum of $300, representing her security deposit, and $1,200, representing eight weeks of rent which she had paid to defendant for the time in which she had lived in the apartment. Defendant counterclaimed to recover the total sum of $2,680, representing alleged rent arrears and cable bills, but, at trial, she stated that she was withdrawing her counterclaim. Following a nonjury trial, the District Court awarded plaintiff the principal sum of $1,500 and dismissed defendant's counterclaim.

In a small claims action, our review is limited to a determination of whether "substantial justice has . . . been done between the parties according to the rules and principles of substantive law" (UDCA 1807; see UDCA 1804; Ross v Friedman, 269 AD2d 584 [2000]; Williams v Roper, 269 AD2d 125, 126 [2000]). The determination of a trier of fact as to issues of credibility is given substantial deference, as a trial court's opportunity to observe and evaluate the testimony and demeanor of the witnesses affords it a better perspective from which to assess their credibility (see Vizzari v State of New York, 184 AD2d 564 [1992]; Kincade v Kincade, 178 AD2d 510, 511 [1991]). This deference applies with greater force to judgments rendered in the Small Claims Part of the court (see Williams v Roper, 269 AD2d at 126).

A security deposit is presumed to remain the property of the tenant (see General Obligations Law § 7-103 [1]) and must be returned at the conclusion of the tenancy (see Cruz v Diamond, 6 Misc 3d 134[A], 2005 NY Slip Op 50187[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2005]). However, at the trial, plaintiff gave her current address as the premises which she rented from defendant. Consequently, it was error for the District Court to include the $300 security deposit in its award in favor of plaintiff, as plaintiff failed to establish that her tenancy had ended.

The District Court also erred when it included in its award to plaintiff the sum of $1,200, apparently representing eight weeks of rent. The fact that an apartment is rented without a permit does not preclude the recovery of rent, absent a statutory bar to such recovery (see Madden v Juillet, 46 Misc 3d 146[A], 2015 NY Slip Op 50214[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2015]; Sinclair v Ramnarace, 36 Misc 3d 150[A], 2012 NY Slip Op 51671[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2012]; Corbin v Briley, 192 Misc 2d 503, 504 [App Term, 2d Dept, 9th & 10th Jud Dists 2002]). We note that, even where there is a statutory proscription against the recovery of rent by a landlord (see e.g. Multiple Dwelling Law § 325 [2]), rent that was voluntarily paid is not recoverable by a tenant, despite the premises' illegal status (see Candela v Fried, 3 Misc 3d 136[A], 2004 NY Slip Op 50508[U] [App Term, 2d Dept, 2d & 11th Jud Dists 2004] [rents voluntarily paid for period of noncompliance cannot be recovered]; see also Ovalles v Mayer Garage Corp., 8 Misc 3d 137[A], 2005 NY Slip Op 51261[U], *1 [App Term, 1st Dept, 2005] [a tenant cannot "recoup rents already paid"]).

Defendant's contention on appeal that the District Court should have found in her favor on her counterclaim lacks merit as, at trial, she stated that she was withdrawing her counterclaim.
In view of the foregoing, we are of the opinion that the judgment failed to provide the parties with substantial justice according to the rules and principles of substantive law (see UDCA 1804, 1807; Ross v Friedman, 269 AD2d 584; Williams v Roper, 269 AD2d 125, 126)."