No Fraud Found in Improper Deregulation of Apartment in J-51 Building

Tenants sued landlord, claiming that their apartment was improperly deregulated. The court denied landlord's request to dismiss the case, and found that the apartment was rent stabilized. Landlord appealed and won, in part. Because landlord was receiving J-51 tax benefits when tenants moved in, the apartment was subject to rent stabilization. The appeals court also ruled that landlord didn't engage in any fraud by removing the apartment from rent stabilization. Landlord informed tenants that they were deregulated when they signed their lease, the rent charged to the prior tenant was a matter of public record via DHCR rent registration, and since tenants knew the condition of the apartment when they moved in, they could have challenged the reasonableness of landlord's individual apartment improvements (IAIs) performed in 2000. The IAIs therefore were legally permissible. However, there was a genuine issue of fact as to what legal rent-stabilized rent should have been charged to tenants.

Taylor v. 72A Realty Associates, LP: 2017 NY Slip Op 04218, 2017 WL 2269598 (App. Div. 1 Dept.; 5/25/17; Tom, JP, Richter, Gische, Gesmer, JJ)