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Massimo D’Angelo was Invited to Speak at the New York County Landlord Tenant Bar Association

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Massimo D’Angelo was Invited to Speak at the New York County Landlord Tenant Bar Association discussing the Regina case

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Massimo D’Angelo was Invited to Speak at the New York County Landlord Tenant Bar Association

  1. 1. Procedural History/Background • In Roberts v. Tishman Speyer, 13 N.Y.3d 270, the Court of Appeals ruled that apartments in buildings with J-51 tax abatements could not be decontrolled when rents rose above the $2000 threshold pursuant to RSL 26-504.2. • The Roberts ruling corrected an erroneous DHCR advisory opinion from January 16, 1996, which advised landlords that they were entitled to luxury decontrol of their apartments even while receiving J-51 tax abatements. • The fact landlords were following DHCR guidance when they deregulated J51 apartments, has been key to courts finding landlords were not acting fraudulently. • According to an amicus brief cited by the majority and dissent in Regina, the Roberts’ decision lead to the recovery of around 50,000 rent stabilized apartments. • Roberts then gave rise to the question of how to set the base date rents for improperly decontrolled apartments, where the decontrol was based on the landlords’ good faith reliance on DHCR policy, rather than on “fraud” in the sense used in Grimm and Thornton. • Regina, is four consolidated cases on certified questions from the Appellate Division, 1st Department. All concerning rent setting after a non-fraudulent deregulation.
  2. 2. Raden v. W 7879, LLC, 164 A.D.3d 440, 84 N.Y.S.3d 30 (N.Y. App. Div. 2018), aff'd sub nom. Regina Metro. Co., LLC v. New York State Div. of Hous. & Cmty. Renewal, No. 1, 2020 WL 1557900 (N.Y. Apr. 2, 2020) • Tenants took occupancy in 1995 at market-rate and commenced action in 2010 seeking a stabilized lease and a recovery of overcharge. • Lower courts found no fraud as the owners correctly anticipated the interpretation DHCR, which was overturned in Roberts, would ultimately adopt concerning the luxury deregulation provisions in J51. • Given the lack of fraud, the Court of Appeals affirmed the calculation of damages ($448.50) made by accepting the rent charged four years before the complaint as the base date rent and adding legal increases.
  3. 3. Taylor v. 72A Realty Assocs., L.P., 151 A.D.3d 95, 53 N.Y.S.3d 309 (N.Y. App. Div. 2017), aff'd as modified sub nom. Regina Metro. Co., LLC v. New York State Div. of Hous. & Cmty. Renewal, No. 1, 2020 WL 1557900 (N.Y. Apr. 2, 2020) • The complaint was filed in 2014. • Appellate Division, 1st Department held that the subject apartments were illegal deregulated in 2000 while the landlord was receiving J- 51 tax benefits. • The lower courts found the landlord did not engage in any fraud in removing apartment from rent regulation given the landlord was following DHCR guidance for J51. • The Appellate Division held that the legal regulated rent should be reconstructed based on what the base date rent would have been if the apartment had not been deregulated in 2000. • Court of Appeals affirmed “tenants' request for a declaration that the apartment was rent-stabilized at the time of their complaint was properly granted” but modified the order to dismiss the overcharge claim based on un-rebutted evidence that their was no overcharge.
  4. 4. Reich v. Belnord Partners, LLC, 168 A.D.3d 482, 91 N.Y.S.3d 410 (N.Y. App. Div. 2019), aff'd sub nom. Regina Metro. Co., LLC v. New York State Div. of Hous. & Cmty. Renewal, No. 1, 2020 WL 1557900 (N.Y. Apr. 2, 2020) • The tenant received a rent-stabilized lease and the landlord registered the rent with DHCR more than four years before any rent overcharge complaint was filed. • The overcharge claim was based on failure to charge rent stabilized rents while receiving J-51 benefits. • Appellate Division, 1st Department held that the landlord did not engage in fraud, and thus in examining rental unit's history to find last regulated rental rate, the court could not look beyond the four-year statute of limitations. • The order dismissing the overcharge claim was affirmed by the Court of Appeals.
  5. 5. Regina Metro. Co., LLC v. New York State Div. of Hous. & Cmty. Renewal, No. 1, 2020 WL 1557900 (N.Y. Apr. 2, 2020) • The DHCR Rent Administrator found that the landlord did not engage in a fraudulent scheme to avoid rent stabilization when they deregulated an apartment while receiving a J51 benefit, but used a reconstruction method to determine what the rent would have been if the unit had not been illegally deregulated. • Appellate Division, 1st Department held the agency was not arbitrary and capricious in finding no fraud, but held that absent fraud the overcharge must be calculated based on the base date four-years before the filing of the complaint and remanded for calculation of the overcharge. • The Court of Appeals affirmed.
  6. 6. Affirms that stabilization status is a free standing claim, not beholden to the SOL for overcharges • Regina via the Taylor facts, although the complaint was filed 14 years after deregulation it was still proper to declare that the apartment was rent- stabilized (“Indeed, in Taylor, regardless of any entitlement to monetary damages, the tenants' request for a declaration that the apartment was rent-stabilized at the time of their complaint was properly granted.” Regina Metro. Co., LLC v. New York State Div. of Hous. & Cmty. Renewal, No. 1, 2020 WL 1557900, at *8 (N.Y. Apr. 2, 2020)). • “[T]here is not, and there has never been, a time limit on when a tenant can claim that a unit has been unlawfully deregulated. Both before and after the HSTPA, tenants have always been able to challenge an unlawful deregulation of an apartment, no matter how far in the past the deregulation occurred (see e.g. Roberts v. Tishman Speyer Properties, L.P., 13 N.Y.3d 270, 890 N.Y.S.2d 388, 918 N.E.2d 900 [2009] [tenants brought suit in 2007 for an unlawful deregulation in 1993]; Kuzmich v. 50 Murray Street Acquisition LLC, 34 N.Y.3d 84, 108 N.Y.S.3d 431, 132 N.E.3d 624 [2019] [tenants brought suit in 2016 for an unlawful deregulation in 2003]; Gersten v. 56 7th Ave. LLC, 88 A.D.3d 189, 928 N.Y.S.2d 515 [1st Dept. 2011] [tenants brought suit in 2009 for an unlawful deregulation in 1999])”. Regina Metro. Co., LLC v. New York State Div. of Hous. & Cmty. Renewal, No. 1, 2020 WL 1557900, at *30 (N.Y. Apr. 2, 2020) (Wilson, J., dissenting).

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