Stuyvesant Town J-51 Ruling Applies Retroactively

Facts: Market-rent tenants of Stuyvesant Town and Peter Cooper Village sued landlord and prior landlord for rent overcharge and claimed that they were improperly deregulated from rent stabilization. New York’s highest court ruled for tenants, finding that landlord wasn’t entitled to deregulate apartments under the luxury decontrol provisions of the Rent Stabilization Law while receiving J-51 tax benefits. The case was sent back to the lower court to determine the amount of rent overcharges. Prior landlord asked the court to dismiss the claims, arguing that the high court’s decision shouldn’t be applied retroactively.

Court: Landlord loses. Prior landlord argued that it relied in good faith on a 1996 advisory letter issued by the DHCR, which had stated that landlords of J-51 buildings could seek high-rent deregulation after monthly rents reached $2,000, as long as J-51 wasn’t the only reason that apartments were subject to rent stabilization. So the change in the law was unforeseeable, and it would be unfair to apply the decision retroactively. But the Court of Appeals found the DHCR’s interpretation of the law incorrect and merely interpreted the law as intended by the State Legislature. The Court of Appeals didn’t create any new law and its decision wasn’t unforeseen. The court didn’t rule on the period of retroactivity.

Roberts v. Tishman Speyer Properties: NYLJ, 8/6/10, p. 43, col. 1 (Sup. Ct. NY; Lowe, J)