April 2025 Insights
By Eileen O’Toole, Esq., Contributing Editor
Some recent cases focused on recurring issues such as fraudulent deregulation of rent-regulated housing and exemption from rent stabilization based on substantial rehabilitation. Some other decisions of interest discussed termination notice and petition requirements in connection with a Good Cause Eviction Notice, strict requirements for the form of a housing court eviction proceeding notice, and an instance where a housing court granted what the owner complained was interim injunctive relief.
Indications of owner fraud remain a recurring source of disagreement between parties in cases concerning improper apartment deregulation as well as rent overcharge. New York’s highest court ruled in Burrows v. 75-25 153rd Street, LLC (LVT #33650) that the lower appeals court had correctly dismissed the case. But even though the Court did not change the lower appeals court’s ultimate dismissal of the tenant’s overcharge claim, it sent the case back to the First Department for a finding that a tenant wasn't required under current law to prove reasonable reliance on a landlord's fraudulent action to invoke the fraud exception and to conform its prior ruling to this reasoning.
In Stankiewicz v. Bristol E. Co. (LVT #33648), a Manhattan court found that pre-trial discovery and perhaps a trial was needed to determine if there was grounds to support the claim by tenants in a building receiving J-51 tax benefits that the owner fraudulently deregulated apartments while the building received the tax benefits and for some time following the decision of New York’s highest court in Roberts v. Tishman Speyers (2009) that high-rent deregulation was impermissible while receiving J-51.
In SP 1143 Second LLC v. Pinson (LVT #33655), where a tenant claimed fraudulent rent overcharge in response to a nonpayment proceeding, the court granted the tenant permission to conduct pretrial questioning of the owner based on an indication of fraud, despite the owner’s protest that there had been no deregulation.
The DHCR continues to process applications from owners seeking exemption from rent stabilization based on substantial rehabilitation. In one decision of interest, Matter of 228 West 132nd Street LLC (LVT #33620), the DHCR found sufficient documentation to approve the application despite the absence of work records and proof of payment, noting that the work in question was done by a prior owner and completed in 2016. In another case, Matter of JLG Queens Holding, LLC (LVT #33621), the DHCR ruled against the owner where there was insufficient proof that the building was in substandard or seriously deteriorated condition when the work commenced. For that reason, the agency did not consider whether 75 percent of building systems had been replaced.
In Manhattan Housing Court, an eviction proceeding was dismissed where the owner claimed the tenant was unregulated due to substantial rehabilitation of the building. In 321-323-325 W. 42nd St. LLC v. McMahan (LVT #33647), the court found that the tenant was rent stabilized because he moved into the building before a new C of O was issued in 2004 and despite the owner’s claim that the substantial rehabilitation work approved by the DHCR actually was completed in 1995. The DHCR, which granted the owner’s exemption application in 2022, had made no determination concerning any particular building tenants.
Questions about the Good Cause Eviction (GCE) law were addressed in an eviction case where the owner refused to renew a tenant’s lease due to nonpayment of rent. Although the owner had included a GCE Notice listing the grounds for lease nonrenewal, in RP Wimbledon Owner, LLC v. Chisholm (LVT #33645), a Manhattan Housing Court dismissed the case because neither the termination notice nor the court petition set forth what amounts were owed and for what periods of time. The court noted that the notice and petition must be “clear, unambiguous and unequivocal.”
A Kings County Housing Court dismissed an eviction petition where the owner failed to use the notice of petition form required by NYC Civil Court Rules and posted on the court’s website. See LoCascio Premises Trust v. Villa (LVT #33654).
In a Manhattan nonpayment proceeding, the tenant asked the court to stop the owner from reporting his unpaid rent to a credit reporting agency while the case was pending and in light of the tenant’s defense of harassment and breach of the warranty of habitability. Although the owner argued that this was a request for injunctive relief unavailable in housing court, the court ruled for tenant and found that it was authorized to employ any remedy that effectively assisted with the enforcement of housing standards. See 100 John Mazal SPE Owner v. Sage (LVT #33660).