For market-rate tenants who suspect that their apartments may have been illegally deregulated, do the new rent laws help them investigate—and maybe get their apartments re-stabilized?
The rent laws recently passed by the New York State legislature make it much easier for market-rate tenants to pursue cases challenging their status—and potentially, to collect rent overcharges, says Sam Himmelstein, a lawyer who represents residential and commercial tenants and tenant associations.
The new legislation is good news for renters who were given market non-stabilized leases but suspect their apartments are actually stabilized. (For information about how to investigate whether your apartment has been illegally de-regulated, read this Ask Sam column.)
One of the most important changes to the law is that it does away with the four-year rule.
Under the former law, the Division of Housing & Community Renewal would reject most complaints of unlawful “high rent vacancy deregulation” if it had occurred more than four years ago. The DHCR said that tenants had to prove an illegal deregulation that took place more than four years ago was the product of a fraud; otherwise their complaint would be rejected.
Under the new law, tenants do not face any time limits for challenging an illegal deregulation, and they don’t have to show that their landlords committed fraud. The new law states that the DHCR or the court shall consider all available rent history reasonably necessary to make a decision as to whether an apartment was illegally deregulated.
“The previous law stated that where a tenant made a complaint of rent overcharge, the court or the DHCR couldn’t look at an apartment’s rent history for more than four years prior to when a tenant filed a complaint, and there was also a four-year statute of limitations on collection of rent overcharges,” Himmelstein explains. “So whatever may have caused the rent to be illegal, if it occurred more than four years ago, no matter how heinous it was, it couldn’t be looked at by the courts.”
Over the years the courts carved out several exceptions to the look back rule, including instances when a tenant alleged fraud, but the four year cut off was the general rule.
Under the new law, the four-year time limit on review of rental history no longer exists and, as with a complaint of illegal deregulation, the court or the DHCR is expected to review as much of the rental history as it deems reasonably necessary to determine the legal rent amount.
Furthermore, under the old law, if the courts found that a landlord had willfully overcharged a tenant when their apartment was supposed to be stabilized, the tenant was entitled to treble damages for only the two most recent years of overcharges, and nine percent interest on the rest.
“The new law says you can go back six years in collecting overcharges, including treble damages,” Himmelstein says.
Another major change in the law is that courts or the DHCR are required to award tenants their costs and attorneys’ fees if they prevail on a claim of overcharge.
And now, the courts can no longer require tenants to bring claims of rent overcharge or illegal deregulation to the DHCR. The new law makes clear that tenants can’t be stopped from suing their landlords for illegal de-regulation and overcharge in the state Supreme Court. HMGDJ Law recommends that tenants sue as a group, where applicable, in state Supreme Court.
“Now the courts can’t stop tenants from retaining attorneys to file multi-plaintiff cases in the Supreme Court, with groups of tenants filing one lawsuit, which cuts down tremendously on legal fees and filing fees,” Himmelstein says. “It’s also more politically powerful because it’s a group of people working together.”
For tenants, pursuing an overcharge case against their landlords has become potentially much more lucrative, but they still need to be proactive.
“The law does not recapture apartments that had had been previously deregulated,” Himmelstein says. “Tenants who are market-rate but believe they should not be are not automatically stabilized. They have to do something affirmatively.”
He adds, “The first steps are to obtain the rent registration history from the DHCR and begin talking to your neighbors who might be in a similar situation. Rent stabilization status not only might bring a lower rent. It also provides security since the landlord will have to renew the lease, at very modest increases, and evictions are much more restricted.”
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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 or call (212) 349-3000.