Landlord Can't Avoid Rent Stabilization by Rescinding J-51 Participation

Landlord of 1,000-unit apartment complex sued the City of New York, claiming that it had relied on representations by HPD that it could charge market rents under luxury decontrol provisions of the rent-stabilization law, even while receiving J-51 tax benefits. Landlord claimed that it would not have participated in the J-51 program if the deregulation was illegal. Landlord sought to rescind its J-51 "contract" and to pay back the tax credits it had received. The court ruled against landlord, finding that the J-51 program didn't create a contract. J-51 was simply a tax benefit program, and landlord participated voluntarily. Nothing in the law or legislative history suggested otherwise. Any agreement between the city and landlord to rescind landlord's J-51 status would be unenforceable.

London Terrace Gardens v. New York City: Index No. 109121/2010 (Sup. Ct. NY; 5/5/11; Gische, J) [13-pg. doc.]