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Altman Victory – What it Means

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Now that the Court of Appeals issued its decision in Altman v. West Fourth LLC, owners are trying to decipher what it means to them. As we reported in the May issue of the RSA Reporter, the Court of Appeals in Altman reversed the earlier ruling by the Appellate Division and held that with regard to a deregulation that occurred in 2005, the determination of whether the legal rent exceeds the deregulation threshold is based upon the rent subsequent to vacancy and not the rent prior to vacancy.

On the one hand, all that Altman stands for is what the entire residential industry understood the law to mean before the Appellate Division’s decision. As the result of the Court of Appeals’ decision, the threat to tens of thousands of deregulations posed by the erroneous ruling by the Appellate Division has passed. The Court of Appeals returned the state of law to where it had been since 1997.

On the other hand, given the unpredictable nature of the courts, the very real possibility that the courts would continue to get this issue wrong was the source of much consternation among apartment building owners. The problems that were caused by the Court of Appeals’ ruling in the Stuyvesant Town case in 2009 was proof positive that nothing could be taken for granted. There was widespread recognition that the problems posed by that case would pale by comparison if the Court in Altman did not reverse the lower court decision.

Where does this leave owners? First, the Court eliminated any doubt that deregulations that occurred prior to the Rent Act of 2011, which was the case in Altman, and which were based upon the post-vacancy rent, were valid. Second, because the language of the Rent Act of 2011 was identical to the law that was interpreted in Altman, there should also be no doubt that deregulations between 2011 and 2015 based upon the post-vacancy rent, are also valid.

There are, however, different interpretations with regard to deregulations subsequent to the enactment of the Rent Act of 2015. That law contains language which is identical to the law which existed prior to the Rent Regulation Reform Act of 1997 and that language has been interpreted, including by the Court of Appeals in Altman, to mean that the deregulation is based upon the rent prior to vacancy.

There has not been definitive guidance from DHCR on this question. In fact, ever since the enactment of the 2015 rent laws three years ago, DHCR’s website has stated that Fact Sheet #36, which has long been relied upon for guidance on the subject of deregulation by both owners and tenants, is “currently under revision.” While opinions do vary on this subject, the more cautious approach adopted by many owners and their attorneys since 2015 has been to deregulate apartments only where the rent prior to vacancy exceeds the deregulation threshold. 

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