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Deals & Dealmakers

NY high court to hear case that may return 100,000 homes to rent-regulated status

The Court of Appeals, New York State’s highest court, is set to hear arguments on a case that may result in the return of over 100,000 apartments to rent-regulated status.

The case, Altman v. 285 W. Fourth LLC, may provide tenants a legal precedent for challenging market rate rents in their apartments. The plaintiff in the case, a certain Richard Altman, was awarded damages for rent overcharges over a four-year period. The New York Supreme Court decision, which was handed down in February of last year, also set the legal rent at $1,829.49, the last rental rate that was registered with the Division of Housing and Community Renewal.

The First Judicial Department of the Appellate Division upheld the decision last October, saying that the previous ruling properly fixed the legal rent. The case may change how apartments become market rate units. Currently, property owners can apply to deregulate apartments once the rent hits $2,700, according to the Rent Guidelines Board. Landlords currently boost rents by renovating apartments when tenants leave. The case may make it necessary for apartments to reach the rent threshold while it is occupied, which takes longer.

Belkin Burden Wenig & Goldman’s Matthew Brett, the counsel for a coalition seeking a review of the decision, disputed the previous ruling, saying that the elevation of the case to the Court of Appeals is evidence of merit.

“The fact that the Court of Appeals, New York’s Highest Court, has granted leave to hear the appeal is significant,” Brett said.

“Property owners for decades have deregulated rent stabilized apartments by lawfully taking rent increases that brought an outgoing tenant’s legal rent over the deregulation threshold.  If the rent was lawfully raised above the threshold, then the next incoming tenant would be a free market tenant. The Appellate Division inexplicably rejected this procedure and upended a decades-long practice of deregulating apartments—a practice supported by the explicit language of the Rent Stabilization Law, the Rent Stabilization Code, agency precedent and many cases.”

REBNY, the Rent Stabilization Association and the Community Housing Improvement Program filed amicus briefs in support of the defendant’s claim in the First Judicial Department. The groups, along with Small Property Owners of New York and the AOAC, are now the petitioners for reviewing the ruling.

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