Aras v. B-U Realty Corp., 2023 NY Slip Op 04917 (2023)

Citation: Aras v. B-U Realty Corp., 2023 NY Slip Op 04917 (2023)
Parent Document: Aras v. B-U Realty Corp., 2023 NY Slip Op 04917 (2023)
Jurisdiction: New York (state)
Effective Date: 2023-10-03
Original Source: https://www.courtlistener.com/opinion/9430365/aras-v-b-u-realty-corp/ ↗

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I agree with the motion court and with the majority that defendants were entitled to charge a market rent when Gladstone and Campana entered their initial lease in 2003, before the J-51 period began, because the apartment had been deregulated in 1998. This fact also leads to the conclusion that this is not a classic Roberts scenario, since Roberts dealt only with landlords who deregulated apartments while receiving J-51 benefits and relying on DHCR guidance that it was appropriate to do so where an apartment was subject to rent stabilization "solely" as a consequence of the landlord's receipt of J-51 benefits. Roberts did not deal with situations where the landlord failed to return a previously deregulated unit to rent stabilization during the J-51 period. While there are indicia of fraud present (including the landlord's failure to register 10B until 2015, after Gladstone and Campana had moved out on March 31, 2014; failure to offer them rent stabilized leases from 2011 through 2014; and continuing to offer a non-rent-stabilized lease to the tenant who occupied the apartment after they left), these tenants have not established on this record that these activities constituted fraud requiring the application of the default formula. In particular, there is no dispute that Gladstone and Campana paid the rents listed in the amended DHCR registration. Accordingly, the motion court properly declined to grant summary judgment on Gladstone and Campana's request that the default formula be applied to determine their rent overcharge claim. However, it should not have determined that the default formula does not [*32]apply as a matter of law, since the landlord failed to seek this relief. I also disagree with the majority's affirmance of this determination, for the same reasons. I would affirm the denial of summary judgment and remand for trial. I would find that, should these tenants fail to establish at trial fraud requiring the application of the default formula, their overcharge claim is limited to any increases in their rent from November 18, 2010 to the date they moved out on March 31, 2014 that exceeded permissible increases. If they prove that they were overcharged and the landlord fails to prove by a preponderance of the evidence that the overcharge was not willful, they would be entitled to treble damages (RSL 26-516; 9 NYCRR 2526.1[a][1]).

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