NY Landlords Liable for Removing Rent Controls

(CN) - The owners of two sprawling apartment complexes in Manhattan can't remove rent controls while accepting tax abatements to improve the units, New York's top court ruled.

Nine tenants of Peter Cooper Village and Stuyvesant Town, a pair of adjoining complexes that include 110 buildings over 80 acres, sued to block the owners from charging market rents while receiving tax breaks.

Tenants claimed that former owner MetLife and current owner Tishman Speyer Properties improperly charged them $215 million in higher rent on one-quarter of the 11,200 apartment units.

The trial court ruled for the landlords, but the intermediate appellate division reversed the decision, stating that landlords who receive tax incentives under the city's J-51 program forfeit their rights under the luxury decontrol provision.

The landlords took the case to the state's highest court, the New York Court of Appeals. In a 4-2 decision, the court reversed the appellate division's decision.

"The (Rent Regulation Reform Act)'s sponsor stated that luxury decontrol was unavailable to building owners who enjoyed another system of general public assistance such as J-51 benefits," the court ruled.

The judges noted that the landlords were worried about the potentially disastrous effects of having to refund hundreds of millions of dollars in back rent."These predictions may not come true; they depend, among other things, on issues yet to be decided, including retroactivity, class certification, the statute of limitations, and other defenses that may be applicable to particular tenants," the court wrote.

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