Did Landlord Fraudulently Maintain Apartment Deregulation Post-Roberts?

April 25, 2025

LVT Number: #33648

Current and former building tenants sued landlord, claiming improper deregulation and rent overcharge. The building had received J-51 tax benefits since 1986. Landlord had received an opinion letter from the DHCR in 1996 stating that J-51 participation didn't preclude lawful deregulation of apartments that reached applicable high-rent thresholds. By 2009, New York's highest court ruled against the DHCR's position in Roberts v. Tishman Speyer Props. and other case law found  in 2011 that this ruling must be applied retroactively.

Current and former building tenants sued landlord, claiming improper deregulation and rent overcharge. The building had received J-51 tax benefits since 1986. Landlord had received an opinion letter from the DHCR in 1996 stating that J-51 participation didn't preclude lawful deregulation of apartments that reached applicable high-rent thresholds. By 2009, New York's highest court ruled against the DHCR's position in Roberts v. Tishman Speyer Props. and other case law found  in 2011 that this ruling must be applied retroactively. Both landlord and tenants sought a ruling in their favor without trial.

Landlord argued that it didn't reregulate apartments until the DHCR issued a FAQ memo in 2016 because it lacked guidance on how to handle previously deregulated units receiving J-51 tax benefits. Landlord also claimed to have properly calculated rents and credited tenants. Landlord objected to any rent freeze. Landlord also sought payment of use and occupancy while the case was pending. Tenants argued that landlord's actions supported a finding of a fraudulent scheme to deregulate and justified use of the default formula for setting and freezing rents. Tenants also claimed that landlord continued to offer them market-rate leases well after the 2009 Roberts decision. 

The court ruled against both sides and found that a trial may be needed to determine the facts because no pre-trial discovery had yet been conducted. Landlord claimed it had been confused and mistaken about what to do following the Roberts decision. The court also found that pre-Roberts deregulation alone wasn't sufficient to establish a fraudulent scheme to deregulate. Belated rent registrations also didn't necessarily establish a fraudulent scheme. The court granted landlord's request for payment of ongoing use and occupancy while the case was pending, although only prospectively.

Stankiewicz v. Bristol E. Co.: Index No. 155953/2017, 2025 NY Slip Op 30786(U)(Sup. Ct. NY; 3/10/25; d'Auguste, J)

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