Trial Needed to Determine If Apartment Improperly Deregulated and Tenant Overcharged

Tenants sued landlord in March 2019, claiming improper apartment deregulation and wilful rent overcharge. They moved into the apartment in 2017 under a non-regulated lease at $4,000 per month. DHCR rent registration records showed that the last prior registered rent-stabilized tenant paid $836.50 in April 2012 but that no subsequent rent-stabilized registrations were filed for the unit. The next tenant paid $3,100 per month under a non-stabilized lease in October 2012. Tenants claimed that vacancy deregulation at this point was illegal because the rent hadn't reached the $2,500 deregulation threshold when the last rent-stabilized tenant vacated and landlord never actually performed individual apartment improvements (IAIs) after that which would qualify for the increase collected. Both sides asked the court to rule in their favor without trial. Landlord asked the court to direct tenants to pay $4,000 per month for use and occupancy while the case was pending.

The court found that neither side was entitled to summary judgment at this point. Tenants hadn't proved as a matter of law that the apartment was unlawfully deregulated in 2012. Tenants' proof was insufficient to demonstrate that IAIs weren't performed. But landlord also hadn't demonstrated as a matter of law that it performed sufficient IAIs in 2012 so as to deregulate the apartment. Landlord also claimed that, even if the apartment rent hadn't reached the deregulation threshold in 2012, it did so later. But that argument presumed that the IAIs in question were done, which hadn't been proved yet. So neither party was entitled to a decision without further fact-finding. As to use and occupancy to be paid while the case was pending, tenant claimed that landlord should be allowed to collect only the amount of the last rent-stabilized rent. The court referred the issue to a Special Master and noted that the amount set would be without prejudice to the ultimate determination of the lawful rent in this case. 

Zhang v. LLS Realty Assoc., LLC: Index No. 153095/2019, 2024 NY Slip Op 153095/2019 (Sup. Ct. NY; 5/1/24; Hagler, J)