Rosenberg & Estis, P.C. ELIMINATES OVERCHARGE REFUND OF MORE THAN $165,000 FOR CLIENT 285 WEST FOURTH LLC
Decision in Altman v. 285 West Fourth LLC Prevents Re-Regulation of Tens of Thousands of NYC Rental Apartments.
Rosenberg & Estis, P.C., a leading New York City real estate law firm, has secured a major victory in the “Altman” case, Altman v. 285 West Fourth LLC, before the Court of Appeals of the State of New York. The landmark decision, issued on April 26, 2018, prevents the restabilization of tens of thousands of New York City apartments that had become deregulated between 1997 and 2011.
As a result of Rosenberg & Estis‘ victory, the Court of Appeals unanimously declared the apartment in question to be exempt from rent stabilization, and vacated a $165,000 overcharge award.
Rosenberg & Estis Member Jeffrey Turkel argued the case before the Court of Appeals on behalf of 285 West Fourth LLC, based on briefs he wrote with Rosenberg & Estis Member Blaine Schwadel. Mark Amsterdam and Mark Lewinter, senior partners with Amsterdam & Lewinter LLP, also represented 285 West Fourth LLC in the case.
“Altman v. 285 West Fourth LLC had the potential to completely upend the city’s residential market by changing the way in which the luxury decontrol threshold is reached,” said Turkel. “This unanimous ruling prevents the unjustified restabilization of thousands of apartments that were appropriately deregulated according to law. It also prevents thousands of deregulated tenants from receiving a windfall in the form of a rent-stabilized apartment with a below-market rent. This was a major challenge to the residential real estate industry, and the industry won.”
The issue underlying the case was whether, under New York City’s Rent Stabilization Law, statutory vacancy increases, as well as increases based on the installation of new equipment and improvements in vacant apartments, can be used to reach the $2,000 rent threshold necessary for vacancy deregulation. Turkel argued that, based on a clause added to the law by the New York State Legislature in 1997, an apartment will become deregulated as long as the rent of the former tenant, plus allowable post-vacancy increases, brings the rent to $2,000, or more.
The case was launched in 2004 when Richard Altman subleased a rent-stabilized two-bedroom apartment in the West Village. After nearly a year, the landlord, Equity Properties, sued the leaseholder to collect a 10-percent increase for the sublet, which is allowed under rent stabilization. The rent was $1,829 at the time. The parties settled the suit in 2005, whereby the leaseholder surrendered the apartment and Altman agreed to sign a non-stabilized lease at $2,482 per month, a rent that was over the $2,000 deregulation threshold.
In June 2014, Altman began legal proceedings to have the apartment declared rent stabilized. He also sought a refund of purported rent overcharges, and a rent freeze until a rent stabilized lease was offered. In October 2014, the Supreme Court ruled in the owner’s favor, holding that the apartment had been vacancy deregulated in 2005 because the legal rent exceeded $2,000 at the time Altman became the tenant.
The First Department overturned that decision in April 2015, stating that the apartment did not qualify for vacancy deregulation because the legal rent was not above $2,000 at the time Altman’s predecessor vacated. The court then turned the matter over to the Supreme Court “for calculation of the amount of rent overcharge owed to plaintiff.” In January 2016, the Supreme Court issued a judgment decided in favor of Altman in the amount of $165,363.80, including treble damages and interest. The First Department affirmed that judgement in October 2016.
The Court of Appeals overturned the First Department’s rulings, holding that to effectuate luxury deregulation of an apartment that became vacant between 1997 and 2011, the legal regulated rent, including post-vacancy increases, had to be above the statutory deregulation threshold at the time the incoming tenant moved in. Citing the language of the statute, and the legislative history of the enactment – which the Court said “could not be clearer” – the Court held that “it is reasonable to read the plain language of the [statute] to refer to the legal regulated rent (including the available statutory increases) applicable to the apartment after the tenant’s vacancy.”