Curbing Rent Fraud In New York City: Legal Proceedings By Residential Tenant Against Landlords Who Frequently Deregulate Apartments And Illegally Inflate Rents

By law, landlords are required to file annual registrations with the New York State Division of Housing and Community Renewal (DHCR) for each regulated apartment. These annual registration statements must state the name of the tenant of record and the amount of rent charged.

In the past, landlords were also required to report any vacancy rent increases (i.e., any increase in the amount of legally chargeable rent when there is a turnover of the tenant). However, as discussed below, beginning in 2019, landlords are no longer allowed to increase rents based on an apartment’s vacancy.

Rent registration requirements are intended to deter landlords from flouting the protections afforded to tenants by the Rent Registration Code (9 NYCRR 2522.8), which limits rent increases to the percentages set by the New York City Rent Guidelines Board (RGB). However, for decades, DHCR was largely indifferent to the rights of tenants. DHCR made little, if any, effort to inform tenants of fraudulent registrations filed by landlords. Even when a landlord failed to register an apartment for years, DHCR remained silent.

For Decades, New York City Landlords Devastated Families and Communities by Committing Rent Fraud, and They Were Rarely Held to Account for their Illegal Actions.

For decades, New York City landlords flouted rent regulation rules with impunity. Among other illegal practices, landlords filed rent registration statements that were willfully and obviously false. The following list sets forth just some of the pervasive, unlawful practices:

  • Landlords routinely increased rents based on a provision of law that allowed for rent increases based on improvements made to individual apartments (“AIA”). However, neither DHCR nor any other agency vetted these AIA’s. Landlords increased registered rents based on alleged improvements that were entirely fictitious and/or grossly inflated.
  • Landlords increased rents year-after-year, despite failing to file rent registrations with DHCR. Under the law, rent is frozen, and no rent increase is allowed, in the absence of a current registration statement. But due to DHCR’s lack of oversight, landlords were rarely held to account for these impermissible rent increases. Few tenants are aware of the procedures for obtaining the rent registration histories for their apartments, which, in any event, can be difficult to decipher without thorough knowledge of New York landlord tenant law.
  • Exploiting the “preferential rent loophole” by claiming to charge tenants less than the amount of the legal regulated rent. At first glance, this practice appeared to benefit tenants. In fact, this was a vehicle by which landlords concealed their filing of inflated rent registration statements. Tenants with preferential rents had no reason to question the registrations filed by landlords with DHCR. This practice resulted in the unlawful deregulation of thousands of apartments.
  • Flouting the prohibition against deregulating apartments during any period when the landlord is receiving J-51 tax benefits.
  • Flat-out stealing tenants’ security deposits and/or charging double or triple the amount of security allowed by law.

The Housing Stability and Tenant Protection Act of 2019: NYC Landlords Now Face More Serious Financial and Legal Consequences for Violating Tenants’ Rights.

On June 14, 2019, in response to the blatant abuses of New York residential landlords, New York’s Housing Stability and Tenant Protection Act of 2019 (HSTPA) became law. Many provisions in this landmark law specifically address the types of abuses described above. For example:

  • Rent increases for AIA’s are limited to $89 for buildings with fewer than 35 units and $83 for buildings with more than 35 units. Photographs and records of the work must be kept permanently.
  • Effective June 14, 2019, landlords are no longer allowed to increase rents by 20% as a result of apartment vacancies. This change is intended to preserve NYC’s supply of affordable housing.
  • Landlords are no longer permitted to revoke preferential rents. As long as a tenant remains in their apartment, a percentage rent increase is based on the preferential rent, rather than maximum allowable rent.
  • Landlords cannot collect more than one month’s rent as security, and are no longer allowed to require a tenant to prepay rent (i.e., pay both the first and last months’ rent) at the beginning of their tenancy.
  • DHCR and courts are now obligated to review all available rent history in response to tenants’ claims of rent overcharges.

Legal Claims Against Landlords.

New York Tenants’ lawyers, including the attorneys at Rapaport Law Firm, have used the new substantive and procedural rights provided by the HSTPA to help clients who suffered years of rent overcharges and other abuses. Attorneys Marc Rapaport and Meredith Miller obtained a state court judgment on behalf of more than 1800 low-income tenants requiring a major NYC landlord to return security deposit overcharges, and provide our law firm with annual proof of compliance with security deposit laws.

Covid-19 has not blocked the progress made toward protecting tenants’ rights. For example, in a decision issued on January 29, 2021 in the case Van Wijk v. 812 Realty LLC, Judge Paul A. Goetz of the New York County Supreme Court issued an Order declaring that multiple apartments at 181 West 181st Street are rent stabilized. On May 7, 2021, an appellate court held that all apartments at a building in Brooklyn were rent stabilized because the tenants had demonstrated that in the past, the building’s basement was used as a dwelling, bringing the building to the six-unit threshold for rent stabilization status. These are just a few examples of the proactive claims made by tenants’ attorneys to hold landlords to account for years of misconduct.

For more than twenty-five years, attorneys Marc Rapaport and Meredith Miller have fought for the rights of New York tenants. We have the legal knowledge and experience needed to effectively navigate New York’s complex array of tenant protection statutes and regulations.