New Rent-Stabilized Apartment Created When Tenants Combined Two Units

Tenants sued landlord in 2016, claiming improper deregulation and rent overcharge. Tenants also sought an injunction to stop landlord from engaging in claimed deceptive business practices in violation of General Business Law Section 349 and a money judgment based on past deceptive business practices.

Tenants claimed that the building was receiving J-51 tax benefits when they moved in. Tenants moved into Apt. 11D in 2000 at a monthly rent of $4,750. In 2006, when adjoining Apt. 11C became vacant, tenants were permitted to remove an adjoining wall and closets to create a new Apt. 11CD. Prior rent-controlled tenant of Apt. 11C had last paid $899 per month. In 2016, landlord filed an initial registration with the DHCR for Apt. 11CD listing Oct. 1, 2006, as the date the new apartment became subject at an initial legal regulated rent of $9,000 per month. This rent was charged from 2007 through 2011; then rent increases were collected in subsequent years. Tenants claimed landlord committed fraud.

The court ruled against tenants and dismissed the case. Landlord created a new apartment, subject to a first rent. Landlord admitted that the new apartment was rent stabilized. Landlord refunded a small overcharge that occurred upon one of the renewal lease terms. Otherwise, there was no rent overcharge. The case was dismissed.

Schrader v. Lichter Real Estate No. One, LLC: Index No. 156305/2016, 2020 NY Slip Op 32501(U)(Sup. Ct. NY; 7/29/20; Jaffe, J)