Court Finds No Fraudulent Scheme to Deregulate Apartment

Tenant sued landlord in 2019, claiming rent overcharge, improper deregulation of his apartment, and a fraudulent scheme to deregulate his apartment. While all units in the building had been registered as either rent controlled or rent stabilized in 2006, landlord registered 26 apartments as permanently exempt from rent regulation in 2008 due to high-rent vacancies, even though landlord had been granted J-51 tax benefits in 2008. In 2016, landlord gave tenant a rent-stabilized renewal lease and registered his apartment as rent stabilized. The court dismissed tenant's request for a ruling in his favor without trial.

Tenant appealed and lost. There were no fact issues that required further review or trial by the lower court. Landlord had deregulated tenant's apartment in good faith by relying on DHCR policy in effect before New York's highest court ruled in the 2010 Roberts case that units in J-51 buildings couldn't be deregulated while the building received the tax benefits. Landlord's late registration of tenant's apartment in 2016 was made after notification by the DHCR concerning the change in the law, and this didn't indicate that landlord engaged in a fraudulent scheme to deregulate the apartment. There was no proof that tenant was overcharged, and no indication of fraud justifying use of the Rent Stabilization Code's default formula to calculate the legal rent.

Gridley v. Turnbury Village LLC: Case No. 2019-12128, 2021 NY Slip Op 03577, NYLJ No. 1623676188 (App. Div. 2 Dept.; 6/9/21; Mastro, JP, Hinds-Radix, Brathwaite-Nelson, Iannacci, JJ)