A. Interpretation of the Provisions by New York State Courts Both parties agree that the only case interpreting these provisions in the same context as the present action is De Santis v. White Rose Assocs., 152 Misc.2d 567, 578 N.Y.S.2d 363 (N.Y.Sup.Ct. 1991), a decision by the New York State Supreme Court. In that case, plaintiff Angela De Santis owned three brownstones in Manhattan until 1988, when she sold them to defendant White Rose Associates and took back a $2.5 million purchase-money mortgage.

Neither side could cite any authority which addresses the status of a previously rent-controlled tenant who elects to purchase under an eviction plan, but for one reason or another never receives shares in the corporation. Justice Saxe addressed a somewhat similar issue in De Santis v White Rose Assoc. ( 152 Misc 2d 567 [Sup Ct, NY County 1991]), which involved a mortgagee that had foreclosed upon a cooperative and sought to evict the apartment owners due to their failure to remain current in use and occupancy payments. The apartment owners were formerly rent-stabilized tenants.

Notwithstanding the discrepancy in the Offering Summary and National Western's recitation of the facts, the court draws all reasonable inferences in favor of the non-moving party, and henceforth assumes that there were 50 vacant apartments upon the conversion of the Property. In retrospect, the conversion of the Property into the Cooperative occurred during one of the most inopportune cycles of the New York City real estate market — the years following the stock market crash of 1987. See, e.g., DeSantis v. White Rose Assocs., 578 N.Y.S.2d 363, 364 (Sup.Ct. 1991). The Sponsor failed to sell apartment units at projected rates and at expected prices.

Upon foreclosure of a cooperative corporation, the mortgagee takes title and possession to the property, effectively abolishing the ownership interest of the shareholders who had originally purchased. See Bruce Bergman, 3 New York Mortgage Foreclosures § 37.09[2][a], 37 — 81 (1990) (citing Federal Home Loan Mortgage Corp. v. New York State Div. of Hous. Community Renewal, 87 N.Y.2d 325, 639 N.Y.S.2d 293, 662 N.E.2d 773, 775 (1995) (noting that upon foreclosure, proprietary leases of shareholders were cancelled and the share purchasers ceased ownership of their allocable shares, but that their rent protection rights were reimposed as they lost their ownership interest); and DeSantis v. White Rose Assocs., 152 Misc.2d 567, 578 N.Y.S.2d 363, 367 (N.Y.Sup.Ct. 1991) (declaring that upon a foreclosure and sale of premises previously converted to cooperative ownership, those occupants who were formerly proprietary lessees stand in the same position as renters — protected by New York City rent stabilization laws, which automatically become applicable as soon as a multiple dwelling is no longer owned as a cooperative.)). The purchasing shareholders effectively lose their original equity and become tenants entitled to occupancy at the legal rents.

Exceptions to the non-rights of such tenants are provided to tenants living in rent control units in New York City by local law. See New York City Administrative Code § 26-408; Da Costa v. Hamilton Republican Club, 187 Misc. 865, 65 N.Y.S.2d 500, 503 (N.Y.Co. 1946), Pisani v. Cominger, 36 A.D.2d 593, 318 N YS.2d 913 (1st Dept 1971); De Santis v. White Rose Associates, 152 Misc.2d 567, 578 N.Y.S.2d 363, 366 (N.Y.Co. 1991). Section 26-408 reads, in pertinent part that:

The RSL provides in clear terms that a building otherwise eligible for rent stabilization is exempt from such regulation if "owned as a cooperative." It follows from the terms of this exemption "that as soon as a multiple dwelling is no longer owned as a cooperative, the Rent Stabilization Law and Code again automatically become applicable to it" ( De Santis v White Rose Assocs., 152 Misc.2d 567, 571). In other words, a dissolved cooperative is not a cooperative and thus is not entitled to an exemption under the RSL.

Foreclosure is not one of the enumerated grounds for eviction ( see 9 NYCRR 2524.3). Thus, a purchaser after foreclosure is not permitted to evict a rent-stabilized tenant on the basis of foreclosure ( see e.g. Pisani v Cominger, 36 AD2d 593; De Santis v White Rose Assoc., 152 Misc 2d 567; Drury v Sidney Davies, Inc., 116 NYS2d 118 [1952]; Da Costa v Hamilton Republican Club of Fifteenth Assembly Dist., 187 Misc 865; Pfalzgraf v Voso, 184 Misc 575; United Institutional Servicing Corp. v Santiago, 62 Misc 2d 935). We note that the protections of the RSC apply to those tenants who continue "to pay the rent to which the owner is entitled" ( 9 NYCRR 2524.1 [a]; cf. Novick v Hall, 70 Misc 2d 641, 645 ["In order to give effect to the expressed intent of the Legislature not to allow the removal of a statutory tenant from his abode so long as he pays the rent to which the landlord is entitled, the statute must be interpreted to mean that if the rent is paid or tendered at any time prior to his removal, the tenant may not be removed"]).

We do not agree with the approach advocated in Sunrise Fed. Sav. Loan Assn. v. West Park Ave. Corp. ( 47 Misc.2d 940). The Supreme Court was therefore in error in calculating the commission based on the aggregate amount of both receipts and disbursements. The Supreme Court also erred by including money which was received for security deposits in the calculation of "sums received" (see, De Santis v. White Rose Assocs., 152 Misc.2d 567). For these reasons, the matter is remitted to the Supreme Court, Suffolk County, for a recalculation of the commission due the temporary receiver. The plaintiff's remaining contentions are either unpreserved for appellate review or without merit.

As the Court of Appeals stated in interpreting a counterpart provision of the former State Residential Rent Law: "The emergency housing legislation * * * was passed * * * to protect 'tenants' and assure them continued possession if they choose — or, to use the statutory language, so long as they continue — to pay rent. It is a privilege granted the occupant, not a duty forced upon him" ( United Sec. Corp. v. Suchman, 307 N.Y. 48, 54-55; see also, Friesch-Groningsche Hypotheekbank Realty Credit Corp. v. Slabakis, 215 A.D.2d 154, 155 [nonpayment of rent waives the protection of the rent stabilization laws]; De Santis v. White Rose Assocs., 152 Misc.2d 567, 572 [the protection applies only to those occupants who have not defaulted in payment of rent]). Furthermore, the clear language of New York City Rent and Rehabilitation Law § 26-408 (a) by its terms is inapplicable to surrender agreements under recognized principles of statutory construction where a tenant has failed to pay rent.

Nonetheless, we believe the court improvidently exercised its discretion in limiting the receiver's fees to $5,000. While it is proper for the court to consider the amount of work delegated to an agent when determining the receiver's fee ( see, Independent Props. Co. v. Mast Prop. Investors, supra; De Santis v. White Rose Assocs., 152 Misc.2d 567, 573), the court's award in this case was insufficient insofar as it failed to recognize the length of the receivership; the relatively modest amount of the request and the undeniable conclusion that the receivership was wholly successful in restoring the property to a habitable condition. Accordingly, we modify to fix appellant-receiver's commission at $16,646.99 (CPLR 8004 [a]).