Landlord Without Permit Could Face Loss Of Rent Paid

Landlords skirting the law may soon be flooding Southampton Town Hall. Although it wasn’t filed by the town, a recent decision in Suffolk County Supreme Court gives renters in the town a clear legal path to seek reimbursement of rent already paid if their landlords lack rental permits.

“I think it’s actually a good thing for the town for a case like this to be out there,” said Southampton Town Attorney Tiffany Scarlato. “We’re hoping that encourages people to obtain rental permits.”

This recent decision, which supported a tenant’s right to sue for rent paid, could serve as yet another deterrent to dissuade landlords in the town from cutting corners when it comes to complying with rental laws. It is already an accepted premise that they cannot retrieve rent lost in cases such as eviction without a permit, according to Ms. Scarlato. And, if a landlord is found to be renting without a permit, he or she can be severely fined or even imprisoned.

On August 7, Suffolk County Supreme Court Justice Thomas Whelan added arguably the most extreme disincentive to renting off the grid after listening to a case between Deborah Schwartz and her landlord, Richard Torrenzano.

Ms. Schwartz, who is an attorney, had been renting Mr. Torrenzano’s home in Noyac for four years beginning at $35,000 per year. As a result of Super Storm Sandy in 2012, she believes, saltwater got into and rusted the home’s heating system, making it faulty and unreliable. The landlord claimed there was “no issue,” Ms. Schwartz said.

“I had the heat repaired one January evening when it was freezing cold out. But Mr. Torrenzano always insisted that the heat was always working,” she recalled. “So that was the initial issue, and then I learned he had no permit.”

According to the judge’s written determination, Ms. Schwartz “assisted Southampton’s Code Enforcement Department in charging her landlord,” and he was fined.

After filing suit against her landlord in May 2013, Ms. Schwartz paid another year’s worth of rent in full in November, but went on to break the lease two months prior to its completion in November 2014. Her lawsuit alleged, among other things, that Mr. Torrenzano had broken his contract by failing to provide basic services relating to heat and hot water. She sought reimbursement of rent, security deposits, late fees and other lease-related expenses, eventually stating as well that since Mr. Torrenzano did not have a permit at the time of her lease, he had no right to collect rent.

Judge Whelan mostly agreed, noting that while the town code was not intended to allow tenants to simply sue their landlords to recoup their rent, it does require a valid rental permit as a condition to collect rent. Therefore, a renter “may recoup rent based upon the implied private right of action which precludes a landlord from ‘collection of rent,’” the judge ruled. He did not think Ms. Schwartz was entitled to recoup her security deposits, however.

“This is the first time a court in Suffolk County has recognized the private right of action under the Southampton Town Code to recover rent paid if it turns out the landlord had no rental permit,” Ms. Schwartz told The Press last week. “It permits a tenant to recoup rent paid where there is no rental permit.” She will seek the return of four years’ worth of rent, totaling more than $140,000.

“The lesson to be learned there is go get your rental permit,” said Ms. Scarlato.

“We’re very confident that we’ll get it overturned on appeal, with all due respect to the judge,” said Howard Wintner, an attorney with the Abramson Law Group who was recently brought on to represent Mr. Torrenzano. Pressed further, he demurred, explaining that was all he was permitted to say.

There were some other variables, like the appearance of deception, which may have nudged Judge Whelan in the direction he took. In his decision, the judge notes that Mr. Torrenzano applied for and received a rental permit in September 2014 and apparently failed to notify the town of the pending litigation against him, claiming he had no knowledge of complaints from tenants.

“At the very least, Torrenzano made a ‘mistake’ in failing to notify the Town of Southampton of the pending litigation. It is noted that Torrenzano’s counsel notarized the rental permit application but denied representing or advising the landlord regarding the application,” Judge Whelan wrote.

A hearing will be scheduled for Mr. Torrenzano’s attorneys, Irwin J. Cohen and Adina T. Glass, to show cause why “sanctions should not be imposed for their alleged frivolous conduct,” as Judge Whelan stated. There will also be a compliance conference for both parties to complete discovery by submitting all necessary documents on October 14.

“We’ll see what ultimately happens. I expected they would appeal,” said Ms. Schwartz. “The war is just beginning, as they say.”