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Housing Court Decision Again Upholds Retroactive Portion of 2015 Rent Act

Housing Court Judge Denies Effort to Reconsider Decision

As we reported in the January edition of the RSA Reporter, Manhattan Housing Court Judge Jack Stoller ruled in 517 W. 212 St, LLC v. Musik-Ayala, that an apartment which had a preferential rent immediately prior to it becoming deregulated upon vacancy between 2011 and 2015 was not deregulated but remained a stabilized apartment based upon provisions of the Rent Act of 2015.

The provisions at issue in the 2015 Rent Act require the existence of BOTH of the following conditions:

(1) a high-rent, vacancy deregulation which occurred between June 24, 2011 and June 15, 2015 AND
(2) an apartment where the tenant at the time of vacancy was charged a preferential rent.

This case does NOT apply if the deregulation either did not occur during that period between 2011 and 2015 or if the vacating tenant was not paying a preferential rent.

Technically, the 2015 Act did not merely provide that an apartment with a preferential rent that deregulated between 2011 and 2015 was re-regulated. Rather, the 2015 law retroactively provided that such units remained in stabilization and, therefore, were never subject to deregulation, thereby subjecting owners to potential overcharge claims for what had been lawful deregulations at the time they occurred. The question for the housing court was, could the Legislature pass this law AFTER those deregulations had already occurred years before?

Although constitutional arguments had not been raised initially, the owner’s attorney did raise various constitutional arguments on the motion to renew and re-argue, including an allegation that the legislation violated the constitutional prohibition against the impairment of contracts. The court again ruled against the owner and concluded that despite the fact that the apartment had to remain under regulation, the rental amount charged to the tenant in this particular case did not constitute an illegal overcharge and the situation did not amount to a substantial impairment of the lease for constitutional purposes.

The court also ruled that the 2015 law, despite its retroactivity, did not constitute a taking of the owner’s property, and that it did not violate the constitutional prohibition against ex post facto laws because that prohibition “does not apply to non-punitive civil proceedings” such as housing court.

The owner has filed a notice of appeal. In the meantime, as we reported in January, the case has since been followed by a judge in the Brooklyn housing court. If you think you may be affected by these decisions, you should contact your attorney as soon as possible. 

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