March Insights
By Eileen O’Toole, Esq.
A number of appeals court decisions cited in this month’s issue address interesting legal questions that have been brewing a while in DHCR or lower court actions. Some others address unique circumstances in reaching unusual results.
Several cases concern loft buildings. In Aurora Assocs. LLC v. Locatelli (LVT #31905), New York’s highest court ruled that a loft unit became exempt from rent stabilization after the sale of a prior tenant’s rights and improvements, enabling the landlord to recover possession from the current tenant in an eviction proceeding. In Matter of Callen v. NYC Loft Board (LVT #31909), the Court of Appeals upheld the Loft Board’s rejection of a settlement between the landlord and tenants who had sought Loft Law coverage, which would have permitted tenants to withdraw their application and be deemed rent stabilized as part of a horizontal multiple dwelling with an adjoining building. The Loft Board’s concern was that the agreement created an illegal living arrangement. In Kim v. United American Land, Inc. (LVT #31901), a housing court noted that it had jurisdiction to direct correction of Housing Maintenance Code violations not otherwise the subject of claims before the Loft Board.
In a Second Department case, Suchdev v. Grunbaum (LVT #31910), the Appellate Division granted SRO tenants a preliminary injunction preventing a landlord accused of harassment from operating video cameras inside the building. The landlord had installed the cameras immediately after it was unable to go forward with an owner occupancy case against all the tenants in the rent-stabilized building because of the HSTPA’s limitation on recovery to just one apartment in owner occupancy cases. The appeals court decision doesn’t explain the reason it differs from many court decisions permitting owners to operate video cameras in public areas of apartment buildings.
The First Department has upheld the DHCR Explanatory Addenda that have already been upheld in many PAR decisions and some Article 78 proceedings to date. In Matter of 160 East 84th St. Assoc. LLC v. DHCR (LVT #31908), the appeals court reiterated prior agency and lower court decisions holding that, while the HSTPA did not retroactively revoke lawful luxury deregulations, such deregulation orders became effective only when the lease or renewal lease in effect at the time of the order expires. And, if such lease expiration occurred after June 14, 2019, there was no longer any luxury deregulation provision in the Rent Stabilization Law to apply and these units remained rent stabilized despite the pre-HSTPA issuance of a DHCR deregulation order.
In another First Department decision, Austin v. 25 Grove St. LLC (LVT #31907), the Appellate Division disagreed with how the lower court calculated a rent overcharge and sent the case back for further fact-finding before reaching a determination. In its discussion, the court noted that, although the overcharge claim was filed in 2020—after enactment of the HSTPA—pre-HSTPA law applied to calculation of pre-HSTPA overcharges. As the court noted, “Part F of the HSTPA governing rent overcharges cannot be applied retroactively to overcharges that accrued before the enactment of the HSTPA.”