Landlord Claims Tenants Fraudulently Avoided Luxury Deregulation

From 2004 to 2008, landlord filed applications with the DHCR seeking luxury deregulation of tenants' rent-stabilized apartment. Landlord didn't file with the DHCR in 2009 or 2010, but instead sued tenants in court, claiming that for the years that the DHCR had denied landlord's applications, tenants had annual income that was greater than the $175,000 deregulation threshold. Landlord claimed that tenants, husband and wife, fraudulently underreported their income to avoid luxury deregulation. Tenants' monthly rent was $3,060. Tenant husband was over 80 years old and unemployed. Tenant wife had been a real estate broker until 2012. She claimed that she worked with a group of brokers and earned only a small portion of split commissions. Tenants asked the court to dismiss the case. The court ruled for tenants. Landlord appealed and lost. Only the DHCR could rule on whether tenants' household income exceeded the threshold for high-rent/high-income deregulation. And the DHCR had already done so for the years in question. Landlord couldn't attack the DHCR's final decisions by later suing tenants directly. Landlord also failed to specify any facts to justify its fraud claim. Its claim was purely speculation.

Katz 737 Corp. v. Cohen: 2012 NY Slip Op 08818, 2012 WL 6620592 (App. Div. 1 Dept.; 12/20/12; Tom, JP, Andrias, Catterson, Acosta, Manzanet-Daniels, JJ)