New Landlord Who Claims Overcharge Not Willful Must Produce Due Diligence Report

Tenants sued landlord for rent overcharge while landlord received J-51 tax benefits for its building. Landlord claimed that it didn't willfully overcharge tenants because it relied on misrepresentations concerning apartment regulatory status in rent rolls provided by prior landlord. Landlord bought the building in 2016. Tenants asked the court to compel landlord to produce a due diligence report it had prepared before it bought the building.

The court ruled for tenants. While the due diligence report in question might be a privileged document and should be redacted, it was reasonable also to conclude that such report may contain statements as to the legal status of tenants' apartments. The report could also rebut landlord's claim concerning its own ignorance and lack of willful overcharge. Portions of the due diligence report that don't relate to the regulatory status of the apartments remain privileged and are properly redacted.

Alekna v. 207-217 W. 110 Portfolio Owner LLC: Index No. 156847/2016, 2020 NY Slip Op 30511(U) (Sup. Ct. NY; 2/25/20; Edmead, J)