Non-Purchasing Tenants in Former Mitchell-Lama Building Weren't Rent Stabilized

Nonpurchasing tenants in a cooperative building complex sued landlord co-op corporation, claiming that they were rent stabilized. The court ruled against tenants, who appealed and lost. The complex didn't become rent stabilized when it was withdrawn from the Mitchell-Lama program in June 2004 since the units were both "financed by loans from" the NYC Housing Development Corporation (HDC), which was a "public benefit corporation," and "subject to rent regulation under the private housing finance law" Article XII. HDC was empowered by statute to regulate rents. So, prior landlord's receipt of J-51 tax benefits didn't trigger applicability of the Rent Stabilization Law. Also, the complex didn't become rent stabilized when it converted to co-op ownership in March 2006 because rent stabilization doesn't apply to buildings owned as a cooperative or condominium, regardless of whether landlord received J-51 benefits. And, even if the complex had been rent stabilized between the time it withdrew from Mitchell-Lama and conversion to a co-op, the conversion didn't require continuation of rent stabilization. However, the portion of the lower court's order granting landlord attorney's fees was incorrect and was reversed. Tenant leases authorized landlord to recover legal fees from tenants only where landlord sued tenants based on tenant default or in defending lawsuits because of tenants' actions. 

West Village Houses Renters Union v. WVH Hous. Dev. Fund Corp.: 2019 NY Slip Op 06861 (App. Div. 1 Dept.; 9/26/19; Friedman, JP, Renwick, Tom, Gesmer, Oing, JJ)