The new stabilized rent of an apartment that had been illegally deregulated must be based on its entire rent history, not just the last four years, a state appellate panel said yesterday.
The ruling is the latest in a series of tenant-friendly decisions to emerge in the wake of the Court of Appeals' 2009 ruling that apartments in buildings receiving J-51 tax benefits cannot be deregulated.
The Appellate Division, First Department, ruled in 72A Realty v. Lucas, 570514/10, that the four-year statute of limitations for rent overcharge actions does not apply when an apartment has been illegally deregulated, partly reversing a June 2011 decision by the Appellate Term.
Justices Angela Mazzarelli (See Profile), David Saxe (See Profile), Leland DeGrasse (See Profile), Rosalyn Richter (See Profile) and Sheila Abdus-Salaam (See Profile) joined the unsigned opinion.
The panel remanded the dispute between an East Village woman and her landlord to Housing Court for further review of the apartment's rent history.
The landlord, 72A Realty, in 2008 filed a Housing Court action seeking to remove Sandra Lucas from her apartment after her lease expired. Market-rate tenants, unlike rent-stabilized tenants, are not entitled to an offer of lease renewal. 72A Realty claimed Lucas' unit became market-rate in 2001, when it became vacant and its legal rent exceeded $2,000, the threshold for deregulation at the time. The landlord said that the legal rent increased considerably thanks to about $30,000 worth of renovations.
The apartment had been rent-stabilized under the J-51 program, which gives landlords tax abatements to make improvements to their properties. Apartments in J-51 buildings are rent stabilized as a condition of the program.
Throughout the 1990s and 2000s, landlords of J-51 buildings would routinely deregulate apartments when possible under the Rent Stabilization Law, and claim a proportionately smaller tax abatement. The state Division of Housing and Community Renewal endorsed the practice.
However, in 2009 the Court of Appeals ruled in Roberts v. Tishman Speyer, 13 NY3d 270, that no apartment in a J-51 building could be deregulated as long as the tax abatement was in place. The decision gave rise to a slew of rent overcharge actions, such as the recently settled lawsuit brought by the tenants of Stuyvesant Town and Peter Cooper Village (NYLJ, Dec. 3).
The Court of Appeals left open several questions, including whether Roberts should apply retroactively.
Subscribe to New York Law Journal
