Landlord & Tenant Law

In tenants' action to establish that the legal regulated rent for their apartments would be established using the Rent Stabilization Code's default formula, both parties appealed from Supreme Court's order granting tenant's motion for summary judgment on that cause of action, but holding in abeyance tenants' summary judgment motion on other claims. The Appellate Division modified to deny tenants' summary judgment motion on all claims for failure to provide sufficient prima facie evidence of fraud.

When tenant brings a rent overcharge proceeding, a four-year lookback period generally applies and prevents a rent-stabilized tenant from challenging earlier errors in setting the base rent. However, when tenant establishes that the base rent is the product of a fraudulent scheme to deregulate the apartment, the lookback period is inapplicable, and the legal regulated rent is determined by using a default formula. In this case, tenants contended that landlord engaged in a fraudulent scheme to overcharge tenants in a building that had benefited from a J-51 tax abatement. Supreme Court granted tenants summary judgment on their cause of action to establish that the default formula should be used to determine the legal regulated rent.