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When we last checked in on the case of Altman v. 285 West Fourth LLC, it had not yet been decided, but it was anticipated to potentially return thousands of market-rate apartments throughout the city to rent stabilization.
Under the city’s rent stabilization law, landlords can legally de-regulate apartments through a combination of vacancy increases—20 percent rent increases landlords apply to new tenants after the prior ones move out—and individual-apartment and major-capital improvements, rent increases proportional to the cost of documented, significant renovations to the apartment or building. Until Altman was decided last month, it was unclear whether a landlord could deregulate an apartment by applying these increases to the rent charged after the tenant moved out.
“Under the 1997 law, an apartment would be deregulated if the apartment became vacant, and the rent charged to the prior tenant was over $2,000 per month, or if the apartment became vacant with a rent over $2,000 per month," says Sam Himmelstein, a lawyer who represents residential and commercial tenants and tenant associations. "That law was on the books for 14 years without any change. In 2011 it was amended to increase the deregulation threshold to $2,500 per month, and in 2015 it was amended again, to further increase the deregulation threshold.”
Each time, the wording of the law was charged slightly.
“The 1997 statute was what the court was looking at in the Altman case,” Himmelstein says. Because the wording of the 1997 statute is unclear, it was disputed whether an apartment could only be deregulated if the tenant moving out had a rent above $2,000, or if the landlord could deregulate the apartment by adding vacancy and individual apartment improvement increases to raise the rent above $2,000 between tenants.
Last month, the state Court of Appeals ruled against the tenant Richard Altman, who argued that his West Fourth Street apartment had been illegally deregulated, because the prior tenant’s rent was below $2,000 per month. Altman’s attorney said that the 1997 law required that the prior tenant’s rent be above $2,000 for deregulation to apply. His attorney also argued that because his client moved in as the subtenant of a prior tenant, and then was given his own lease, the vacancy increase shouldn’t have been applied, since there was no actual vacancy.
A ruling in favor of Altman could have meant that under the 1997 law, when a tenant moved out of a stabilized apartment and the landlord raised the legal rent above the stabilization threshold, the next tenant would nevertheless still be stabilized. The previous tenant’s rent, in other words, would have to go above the threshold for the unit to be removed from stabilization and the subsequent tenant to be charged market-rate rent.
But now, given the decision in favor of Altman’s landlord, fewer tenants may be able to challenge their apartments’ deregulated status.
“If a client were to come into our firm and present that they moved into their apartment in 2005, and the prior tenant’s rent was $1,800 and then the rent was raised to $2,500, and it looks like the landlord legitimately raised the rent, we'd probably tell them they’re not rent-stabilized under Altman,” Himmelstein says.
That said, several updates to rent stabilization laws make matters a bit murky. In 2011, for instance, the state legislature amended a section of the law that could benefit some tenants.
“The amendment made it clear that if a rent stabilized tenant was in occupancy with a preferential rent and moved out, the only way the next tenant is deregulated is if the legal rent of the prior tenant is over $2,500 [the stabilization threshold at the time],” says Ronald Languedoc, a partner at Himmelstein, McConnell, Gribben, Donoghue & Joseph. “Also, although the words of the 1997 law and the 2011 law are very similar, neither the court nor the [Division of Housing and Community Renewal] has yet definitively decided whether the 2011 law should be interpreted the same as the Court of Appeals interpreted the 1997 law in Altman.”
The 2015 update to the law added further nuance. That law raised the stabilization threshold to $2,700 a month, and also added a system called indexing, in which the stabilization threshold increases by the same percentage that the Rent Guidelines Board sets for one-year leases.
“That’s why the threshold is now $2,733.75, which creates a way for tenants who are approaching the threshold to stay under it by continually signing one-year leases,” Himmelstein explains.
The 2015 law also contains new language that seems to adopt a lower court decision that ruled in favor of Altman. So the Altman case may have been decided, but the questions it raised about stabilization could still be to some renters’ benefit.
“[The 2015 law] seems to adopt the Altman analysis for leases entered after the effective date of that law, by saying that if the prior tenant’s rent was below the threshold, even if the landlord increases the rent, the next tenant is still stabilized,” Himmelstein says. “I’ve taken that position with landlords in negotiations and there hasn’t been much pushback. They seem to agree.”
This means that tenants who moved into apartments that were deregulated after the 2015 law was enacted may be eligible for rent stabilization.
“An increasing number of supposedly market-rate tenants with rents above the threshold have been coming to us and saying, ‘Am I stabilized?’ If the 2015 law applies, we're going to argue that they are under that Altman analysis,” Himmelstein says.
The various amendments to rent stabilization laws, along with the appellate court’s decision on Altman, seems to leave New York City landlords and renters with two different sets of rules for stabilization, depending on the year the apartment was supposedly deregulated. And the complexity of the rent stabilization law means that if you’re not sure whether you should be stabilized, it’s a good idea to hire an attorney to help you parse the situation. You can also get the process started on your own by requesting your apartment’s rent history from DHCR, and seeing if there have been any rent hikes that strike you as suspect.
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Sam Himmelstein, Esq. represents NYC tenants and tenant associations in disputes over evictions, rent increases, rental conversions, rent stabilization law, lease buyouts, and many other issues. He is a partner at Himmelstein, McConnell, Gribben, Donoghue & Joseph in Manhattan. To submit a question for this column, click here. To ask about a legal consultation, email Sam at [email protected] or call (212) 349-3000.