Tenant Awarded Over $195,000 in Rent Overcharges

Landlord sued to evict rent-stabilized tenant for nonpayment of rent. Tenant claimed improper deregulation of her apartment and rent overcharge. The trial court ruled for tenant, finding that the base date rent was affected by a fraudulent scheme to deregulate the apartment and that the overcharge was willful. The trial court's decision was issued before New York's highest court ruled in its April 2020 Regina Metro. v. DHCR decision that the rent must be established by application of the default formula. So the court ruled that the trial must be reopened to permit landlord and tenant to present additional proof relevant to the default formula. The court then awarded tenant rent overcharges totaling $195,973 and legal fees totalling $57,600.

Landlord appealed and lost. The trial court's finding that landlord engaged in a fraudulent scheme to deregulate the apartment was based on a fair interpretation of the evidence. Landlord and its predecessors deliberately hid the regulatory status of the apartment from tenants by claiming that the apartment was deregulated when it was actually registered with the DHCR, and omitted the required riders that would've demonstrated to a tenant that the apartment was still subject to rent stabilization. Landlord also offered no proof at trial to justify deregulation in 2010, when the rent charged was still below the deregulation threshold then in effect or in 2011 when tenant signed her first lease. Landlord's claim that tenant failed to prove all the elements of fraud wasn't raised below and therefore wasn't considered by the appeals court. So the appeals court need not consider whether December 2024 amendments to the rent stabilization law, stating that "there need not be a finding that all of the elements of common law fraud...were satisfied" before determining whether there had been a fraudulent scheme to deregulate a unit, applied in this case.

St. Nicholas 24 LLC v. Chavez-Lujan: Index No. 570090/24, 2024 NY Slip Op 50755(U)(App. T. 1 Dept.; 6/21/24; Hagler, PJ, Tisch, James, JJ)