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New ApartmentsThis is the final article in a series about developments in rent overcharge litigation that have taken place since 2009, when the Court of Appeals upheld the ruling of the Appellate Division, First Department, 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). Its goal is to offer modest observations about legal policy considerations that ought to be addressed.

This first policy observation comes from the portion of the Court of Appeals’ Roberts decision that found that the DHCR had misinterpreted both Real Property Tax Law (RPTL) §498 and RSL §26-504.1. The court noted the DHCR’s lack of competence to rule on tax matters, and also that the “DHCR’s reading … [of RSL §26-504.1] is contrary to the plain text of the statute.” 13 N.Y.3d at 286-287. The Roberts appeal did not involve rent overcharge claims, but instead presented a certified question about the effect of the J-51 real estate tax abatement program on the RSL’s luxury deregulation provision. Thus, Roberts is correctly characterized as a tax law decision which ruled on an RPTL exemption. Court of Appeals precedent holds that, “in construing a tax exemption statute, the well-settled rule is that if ambiguity or uncertainty occurs, all doubt must be resolved against the exemption … [m]oreover, a statute authorizing a tax exemption will be construed against the taxpayer unless the taxpayer identifies a provision of law plainly creating the exemption … [t]hus, the taxpayer’s interpretation of the statute must not simply be plausible, it must be the only reasonable construction.” Matter of Charter Dev. Co. v. City of Buffalo, 6 N.Y.3d 578, 582 (2006). The policy consideration favors the State’s taxing authorities over individuals who claim exemptions because “an exemption is not a matter of right, but is allowed only as a matter of legislative grace.” Matter of 677 New Loudon v. State of N.Y. Tax Appeals Trib., 19 N.Y.3d 1058, 1060 (2012). Against this contextual backdrop, it is easy to surmise why the Court of Appeals ruled as it did in Roberts: By violating the requirements of the J-51 program, the landlord had received the benefit of a massive real estate tax abatement to which it was not entitled, and thereby became a tax evader.

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