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High Court Strikes Down Section Of Controversial Rent Reform Laws

Court of Appeals Hall in Albany, N.Y.

The New York Court of Appeals ruled in favor of landlords in a case that allowed the court to weigh in on the 2019 rent regulation law for the first time.

In a 4-3 opinion, the seven-judge panel ruled that a portion of the Housing Stability and Tenant Protection Act of 2019 that allowed tenants to sue to collect overcharges did not apply retroactively to cases. 

The laws, lauded by tenant activists and rebuked by the commercial real estate industry, were passed last June. Among other things, they limits late rent fees, broker fees and application fees and the amount of money landlords can spend to renovate rent-stabilized apartments.

One portion of the law stated that a court can view up to six years of rent history to determine whether the landlord should pay back charges. But the new ruling, which aggregated four separate lawsuits into a single case, amends this so that the portion, Part F, can't be applied to cases that occurred before the law was enacted. 

It also limits the scope of the lookback period altogether. Except in cases of fraud, the appeals court ruled, the court can’t consider rent beyond a four-year window. The judges also made clear that the decision in this case did not override the portion of last year’s law, but rather, defined the scope with which it could be applied. 

“In this case we are not invalidating or ‘striking down’ the overcharge calculation provisions in the HSTPA,” the four assenting judges wrote in their decision. “The only question presented and resolved here is whether those provisions ... may be applied retroactively.” 

Landlords in the case touted the decision as a victory for all in the New York real estate sector. 

“The Court of Appeals handed down a fair and thoughtful decision that will have a tremendous impact across the real estate industry,” Deborah Riegel, a Rosenberg & Estis attorney who represented Belnord Partners LLC, said in a statement. “A ruling against the owners would have been catastrophic, retroactively subjecting them to large overcharge claims.” 

Four appeals were combined in this case as tenants sought payments for alleged rent overcharge from four landlords — Belnord Partners LLC, Realty LP, W7879 LP and Regina Metropolitan Co. LLC.