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This article is the first in a series examining developments in rent overcharge litigation, which has mushroomed in New York County in the decade since the Court of Appeals upheld the Appellate Division, First Department’s decision in Roberts v. Tishman Speyer Props., L.P., 62 A.D.3d 71 (1st Dep’t 2009), aff’d 13 N.Y.3d 270 (2009). That case voided the landlord’s illegal “luxury decontrol” of Lower Manhattan’s entire Peter Cooper Village/Stuyvesant Town apartment complex. See McK. Unconsol. Laws §26-504.3. The Roberts decision found that the landlord had improperly claimed a real estate tax abatement for the complex under the “J-51 Program,” which also forbade owners from deregulating any rent-stabilized apartments for as long as their buildings were enrolled in the program. See RPTL §489. It is interesting to note that Roberts was a tax law decision, and did not review any individual rent overcharge claims. Under New York City’s rent regulatory system, rent-stabilized or rent-controlled tenants normally submit such claims to the New York State Division of Housing and Community Renewal (DHCR). In Roberts’ wake, however, it gradually became more common for tenants of improperly deregulated apartments to submit their (sometimes lucrative) rent overcharge claims directly to Supreme Court, which has concurrent jurisdiction over them with the DHCR. In the decade since deciding Roberts, the Court of Appeals issued a number of rulings on issues that arise in rent overcharge litigation. The court’s decisions fall into four main categories; i.e., those which review: (1) Roberts overcharge claims; (2) Grimm overcharge claims; (3) “regulatory status” claims; and (4) Article 78 proceedings. Space requirements dictate that this article’s review of those holdings will be brief and will omit excessive editorial content.

A “Roberts-based claim” is an allegation of a rent overcharge that resulted from a landlord’s improperly deregulating a rent-stabilized unit while its building was enrolled in the J-51 real estate tax abatement program. In Borden v. 400 E. 55th St. Assoc., L.P., 24 N.Y.3d 382 (2014), the Court of Appeals held that groups of tenants may assert Roberts-based claims jointly in a class-action suit, as long as they waive the treble damages authorized by RSL §26-516 (a). That statute permits landlords to avoid treble damages if they can overcome the presumption that an overcharge was “willful.” The Borden holding noted that “there is little possibility of a finding of willfulness” for Roberts-based overcharge claims, since many owners were guided by a 1996 DHCR advisory opinion that landlords were allowed to seek luxury deregulation of rent-stabilized units in buildings enrolled in the J-51 program. The court deemed that the statute’s treble damages provision was a waivable “penalty,” whereas a finding of rent overcharge judgment was a compensatory “award.”

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