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How to defend yourself in civil court against a tenant?  

I currently have a tenant that has broken the lease several times (most issues still remain uncured).  The latest issue is a big liability that I don’t want to ignore.  The tenant is running an illegal daycare with no license or insurance.  (I called the city to verify – an application and inspection is pending even though the lease states RESIDENTIAL USE ONLY!).    Because of the liability I sent the tenant a letter stating the issues and asked her to stop. I also placed a sign on MY front gate advising all parents dropping off the kids that the properly is residential and not authorized by the City of New York to conduct any childcare services.  The tenant is now suing me in Civil Court (NYC) for harassment (sending letter to her and placing a sign on her door).  All lies!!  My question is, because the NYC Landlord and Tenant Court system is geared to ONLY helping the tenant, what is my best way to approach this issue on my calendar date?   

Report her to the local licensing board, and have THEM shut her down directly. You can then say in court that the government already took a stand against her illegal activity, and you were just trying to avoid yourself being held accountable for her illegal actions. You may also want to file for eviction for breach of lease, because I doubt she's going to keep paying her rent.
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