In a victory for New York residential landlords, the majority on a divided Manhattan appeals court found that there is a hard four-year limit to calculate damages in rent overcharge cases involving buildings where landlords are reaping the benefits of a controversial and complex tax abatement credit.

The 3-2 ruling by a panel of the Appellate Division, First Department, potentially limits the amount that tenants can seek in rent overcharge cases concerning previously rent-regulated units in buildings where owners have been the recipient of New York City’s J-51 benefit. The benefit gives landlords a break on their real estate taxes for improving their buildings but prohibits them from deregulating units while they collect the credit.

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