Court Finds No Indicia of Fraud in Connection with Overcharge Claim

Landlord sued to evict deregulated tenants for nonpayment of rent. In a request to amend their answer to the petition, tenants claimed that they were rent stabilized and questioned whether the apartment was properly deregulated 10 years earlier. They also challenged the base date rent based on a claim of fraud. The court granted tenants' request to amend their answer and for pretrial questioning. Even though there is a four-year statute of limitations on rent overcharge claims, a court can look back more than four years to determine whether an apartment is actually rent stabilized. The court can also go back more than four years to see whether the base date rent was tainted by fraud, but only if there are indications of a fraudulent scheme to deregulate the apartment. In this case, tenants merely claimed that the rent increase in 2003 exceeded the permissible rent guidelines. This wasn't enough to support a claim of fraud. Tenants could conduct pretrial questioning since rent history documents were in landlord's sole possession.

ICW 89 DeKalb LLC v. Walsh: 46 Misc.3d 1227(A), 2015 NY Slip Op 50322(U) (Civ. Ct. Kings; 3/10/15; Lehrer, J)