Tenant Can Vacate Settlement Agreement Due to Potential Rent Overcharge

Landlord sued to evict a deregulated tenant for nonpayment of rent. Landlord and tenant signed a settlement agreement in court. Tenant, whose monthly rent was $4,150, agreed to pay $24,900 in back rent owed over a period of time.  An eviction warrant was issued but execution stayed pending payments. Tenant later asked the court to vacate the agreement after consulting an attorney and realizing there was a potential rent overcharge. The court ruled for tenant, finding that this was grounds to reopen the case. Landlord had deregulated the rent-stabilized apartment when the rent reached $2,000 per month. But the building was receiving J-51 tax benefits at the time and New York's highest court later established in the Roberts case that this was unlawful. In the 2012 case of 72A Realty Assoc. v. Lucas, an appellate court indicated that the deregulation of a rent-stabilized apartment in a building with a J-51 tax abatement prior to the ruling in the Roberts case, combined with a lack of clarity as to the establishment of a vacancy rent at such a level to merit luxury deregulation, warranted an examination of any available records of the rental history needed to set the proper base date rent. There was a question in this case as to whether the rent increase for tenant's apartment from $1,018 in 1997 to $4,150 was justified, and the proof presented by landlord so far was insufficient to explain individual apartment improvements made before tenant moved in. Tenant may have a meritorious rent overcharge defense.

Clermont York Associates LLC v. Zgodny: Index No. 73941/2012, NYLJ No. 1202586642126 (Civ. Ct. NY; 1/29/13; Stoller, J)