Tenant Claims Landlord Fraudulently Deregulated Apartment

Tenant sued landlord, claiming that her apartment was improperly and fraudulently removed from rent stabilization. Landlord had registered the apartment with the DHCR as permanently exempt due to high-rent vacancy deregulation at a time when the building was receiving J-51 tax benefits. Tenant sought a declaration that the apartment was rent stabilized, an order directing landlord to give her a rent-stabilized lease at the proper lawful rent, triple damages for rent overcharges, and attorneys' fees. Landlord admitted that tenant was rent stabilized due to the J-51 tax benefits. Tenant claimed that there was no question of fact and asked the court to determine the base date rent without trial.

The court ruled against tenant, who appealed and lost. It was too early to determine the base date rent. Rent registration records showed that the rent increased from $648 to $2,175. Landlord said that the increase was lawful because the apartment went from rent controlled to rent stabilized. But the rent increase was based in part on unspecified apartment improvements. And neither prior tenant's lease nor any other documents explained the rent increase. Further pretrial questioning and document production was needed to determine whether landlord engaged in a fraudulent scheme to deregulate the apartment that tainted the reliability of the base date rent. Until the fraud issue was decided, the court also couldn't determine whether tenant's overcharge claim was barred by the four-year rule and whether any overcharge was willful.

Meyers v. Four Thirty Realty: 2015 NY Slip Op 03069, 2015 WL 1636941 (App. Div. 1 Dept.; 4/14/15; Gonzalez, PJ, Tom, Richter, Manzanet-Daniels, Kapnick, JJ)