Were Rent Concessions in 421-a Building Part of a Scheme to Inflate Initial Rents?

Tenants in a class action sued landlord, claiming that landlord improperly manipulated the initial legal regulated rents of apartments in a 421-a building by offering tenants rent concessions. The court denied landlord's motion to dismiss the claim since questions of fact remained that would require a trial.

Landlord appealed and lost in 2023 (see LVT #32545) because landlord didn't refute tenants' claims that certain purported construction concessions were part of a fraudulent scheme to register the initial rents charged at inflated amounts. The appeals court also denied an appeal by tenants who disputed the lower court's ruling that the class period should commence four years rather than six years before the complaint was filed because the rent overcharge claims in this case accrued prior to enactment of the HSTPA on June 14, 2019. 

The case was sent back to the lower court where tenants asked the court to rule without a trial that landlord overcharged tenants by offering construction concessions even through there were no actual inconveniences due to ongoing construction work. The court denied this request because tenants didn't present sufficient facts to warrant a finding that landlord's construction concessions were a sham. Tenant documents instead raised questions about the construction concessions. Tenants didn't show, from someone with personal knowledge at that time, that all construction was complete and that the tenants didn't suffer the inconveniences contemplated by the construction concession. Without a firsthand account, the court couldn't conclude that landlord engaged in a complex scheme to unlawfully inflate the building's initial rents. Although ruling against tenants at this point, the court also rejected landlord's argument that public policy required the court to deny tenants' request for summary judgment. 

Wise v. 1614 Madison Partners, LLC: Index No. 154592/2022, 2025 NY Slip Op 31094(U)(Sup. Ct. NY; 4/3/25; Bluth, J)