Post-vacancy increases included in calculation for rent stabilization deregulation. On April 26, 2018, the New York Court of Appeals held that vacancy increases are included in determining if the rent amount triggers deregulation of a rent-stabilized apartment. Richard Altman sued 285 West Fourth LLC, its landlord, asking the court to declare that his apartment is subject to rent stabilization and requiring the landlord to offer Altman a rent-stabilized lease. Rent stabilization provides tenants with rates for rent increases set once a year by the Rent Guidelines Board limiting how much a landlord can increase the rent.
In 2003, Altman subleased an apartment in the West Village from the then-existing tenant, Keno Rider. At the time, the tenant had a rent-stabilized lease with the prior landlord, Equity Properties, for $1,829 per month.
In 2005, the Rider surrendered all rights to the apartment and Altman became the new leased tenant. The new lease included an agreement between Altman and Equity Properties that the apartment was no longer rent-stabilized “because the legal rent was or became $2,000 or more on vacancy” after adding the statutory vacancy increase and making the new rent $2,482.
Rent Stabilization Law § 26-504.2(a) states that a rent-stabilized apartment that becomes vacant between 1997 and 2011 will be deregulated if (1) the apartment becomes vacant and where at the time the tenant vacated such housing accommodation the legal regulated rent was $2,000 or more per month; or (2) if an apartment is or becomes vacant with a legal regulated rent of 2,000 or more per month.
In 2007, 285 West Fourth LLC purchased the building and entered into a fair market renewal lease with Altman, which increased his rent to $2,600. Altman and 285 West Fourth LLC also executed an agreement acknowledging that the apartment was not subject to rent stabilization and that Altman would refrain from challenging the nonregulated status.
In 2014, Altman sued 285 West Fourth LLC asking the court to declare his apartment was subject to rent stabilization and determining the lawful rent and money judgment for any rent overcharges.
The Supreme Court declared that, under the Rent Stabilization Law, Altman’s apartment was not entitled to the protection of rent stabilization because the apartment was deregulated in 2005 when Altman became the leased tenant and the legal rent with the 20% vacancy increase exceeded $2,000.
The Appellate Division disagreed and declared that Altman’s apartment was entitled to the protection of rent stabilization. The Appellate Division calculated the legal rent amount “at the time the [previous] tenant vacated” the apartment.
The Court of Appeals, however, did not agree and held that the deregulation of a rent-stabilized apartment was triggered when the legal regulated rent, including the vacancy increases, were above the $2,000 at the time the new tenant moved in. Thus, following Altman’s execution of the new lease in 2005, the legal regulated rent that applied to deregulation was Altman’s new rent of $2,482 and not Rider’s prior rent of $1,849.
Altman v. 285 West Fourth LLC, 2018 NY Slip Op 02829 (Apr. 26, 2018).
By: Dorichel Rodriguez (Dorichel is the CityLaw Fellow and NYLS Graduate, Class of 2017.)