Plaintiffs, tenants of lower Manhattan apartments, sued their landlords (defendants). The defendants had received certain tax benefits pursuant to Real Property Tax Law (RPTL) §421-g, (§421-g) in connection with the conversion of their buildings from office use to residential use. They claimed that defendants failed to treat their apartments as rent stabilized (stabilized), notwithstanding that the defendants received benefits under §421-g. The defendants argued that the apartments are exempt from stabilization pursuant to the luxury deregulation provisions of the Rent Stabilization Law (RSL).

The trial court denied the defendants’ motions for summary judgment and granted the plaintiffs’ cross-motions declaring that the apartments were subject to stabilization. The Appellate Division reversed and granted the defendants’ motions for summary judgment, declaring that the apartments had been properly deregulated and were not subject to stabilization.