COURT ENFORCES LANDLORD’S ORAL
A non-payment summary proceeding was commenced by the filing of a Notice of Petition in which the petitioner-landlord sought 10 months rent totaling $23,000. The respondent-tenants stipulated on the record that they were liable for the $23,000 of rental arrears; however, a counterclaim was put forth by the tenants seeking $44,003. They asserted that when they were looking for a house to rent, the petitioner’s husband informed them that if they rented the Long Island premises for four years, they would have an option to purchase the home for $480,000. The tenants testified that this option to purchase the home was the main reason why they rented the premises. The following improvements were made at the premises by the tenants: new kitchen floor, landscaping of the backyard, new white pvc fencing around the house, rebuilding of the front stoop with bricks, new downstairs bathroom and a laundry room off the kitchen. While these renovations were being made, the tenants could not reside in the premises; however, they paid a total of $11,500 to the petitioner-landlord during this period. The tenants further testified that they paid contractors approximately $32,000 for the construction. Although it was allegedly requested, the landlord never submitted a four-year lease with the option to buy the property. The issues considered by the court were as follows: (i) are respondent-tenants contractually liable for the unpaid rent to the petitioner; and (ii) are the respondent-tenants entitled to restitution and damages for the money that was invested into improving the home and the five months rent while the renovations were ongoing. At the time of trial, the petitioner’s husband who handled the negotiations to rent the house, admitted to only entering into negotiations with one of the tenants. The petitioner did not provide evidence of a contractual relationship between himself and the tenants. Since no documentary evidence could be provided in evidentiary form of a contractual relationship, the landlord’s claim for rental arrears was dismissed with prejudice against them. An oral agreement for a four-year lease term must be in writing to be enforceable. The General Obligations Law requires that lease agreements longer than one year are to be in writing and subscribed by the party or his/her lawful agent. As a result, the four-year lease was unenforceable. Oral option to purchase the property at $480,000 was also barred by the statute of frauds. The court noted that the tenants did not request any relief concerning the option to purchase the house at a price of $480,000. An action for restitution damages based on unjust enrichment requires that: (i) the defendant received money, property or services belonging to or provided by the plaintiff; (ii) the defendant benefited from the receipt of the money, property or services; and (iii) under principals of equity and good conscience, the defendant should not be permitted to retain the money or property or should be required to pay for the services. Where a contract is unenforceable as induced by fraud, the defrauded party may recover the benefits conferred in an action in quantum meruit. During the trial, the tenants did not offer proof as to the cost of the renovations, proof of payment for the renovations nor any increase in value to the property due to the renovations. Their failure to offer adequate proof of damages as to the $32,000 in renovation costs precluded their recovery. During the landlord’s testimony, he admitted on the stand that he received $7,300 from the tenants. This amount included $2,500 for the bathroom, $3,000 for the laundry room and $1,800 for the backyard fence. The tenants did offer proof that their motivation for improving the house was the assumption that after four years of renting, they would be able to purchase the home from the landlord for $480,000. The landlord further admitted the existence of the oral agreement that the tenants could rent the house for four years with an option to buy at a price of $480,000. This admission removed the oral argument from the statute of frauds and made the oral agreement enforceable. As a result, the tenants did have the right to reside at the premises for four years with an option to purchase it for $480,000. “The …admission of the existence and essential terms of the oral agreement was sufficient to take the agreement outside the scope of the Statue of Frauds. Indeed, the statute of frauds was not enacted to enable one to interpose it as a bar to a contract fairly and admittedly made.” The court concluded that the landlord was entitled to the rent of $23,000 less the sum of $18,800 due the tenants. As a result, the landlord was awarded a money judgment of $4,200 against the tenants and they may proceed to evict the tenants unless paid the sum as determined by the court. Kaur v. Guida, Supreme Court, Nassau County (NYLJ 10/7/2008). Courtesy of Alfred M. Fazio, Esq., Capuder Fazio Giacoia LLP, 90 Broad Street, New York, New York 10004 (212) 509-9595
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