Two Bills Targeting Illegal Rent Increases Await Their Fate

The state Senate and Assembly passed a duo of bills in June aimed at helping rent stabilized tenants dig deeper into their rent histories to challenge suspicious increases. The governor has yet to act on them. 

Two of the last pieces of legislation to pass through the state legislature back in June are also among the last bills awaiting Gov. Kathy Hochul’s signature before the year runs out. 

Amid an otherwise disappointing 2023 session for New York City renters, the Senate and Assembly passed a duo of bills aimed at helping rent stabilized tenants dig deeper into their rent histories to challenge suspicious increases—a defense that can be helpful if a tenant is facing eviction in housing court.

Both bills are co-sponsored by Manhattan Senator Brian Kavanagh, chair of the Senate Housing Committee, and landed on Gov. Kathy Hochul’s desk on Dec. 12, starting a 10 day clock for her to sign, veto or amend them. Reached for comment, a Hochul spokesperson said the bills are under review.

Under rent stabilization, roughly 1 million New York City tenants have the right to a lease renewal. Landlords can only increase rents under certain circumstances, and can land in court for digressions like raising rents on the basis of phony renovations, or failing to register their apartments with the state.

Manhattan Assemblymember Linda Rosenthal, chair of her body’s Housing Committee, co-sponsors one of the bills that, as written, would lock in a broad definition of landlord fraud in the context of rent overcharge cases—one contrary to the definition used in recent state court decisions, including a 2020 Court of Appeals decision called Regina.

As of Dec. 13, Rosenthal was in talks with Hochul’s office about her bill, and possible amendments, she said. “I think it’s crucial that we protect people when there is fraud,” she told City Limits. “And there are many cases of fraud, we just have to find the right language.” 

Absent a fraud allegation, tenants who believe they are being charged too much rent can only review a few years of their rent history for errors—a prerequisite for potentially getting their rent lowered, either by a judge or Housing & Community Renewal (HCR), the state oversight agency. 

Under the Rosenthal bill, landlords would be presumed to have committed fraud if, after October 2011, they received a tax abatement through either the 421a or J51 program and then failed to register their apartments as regulated. 

The bill would also roll back a precedent applied in recent state court decisions: that tenants cannot allege fraud if they have access to their state rent records, because the records are not hidden and they could have challenged suspicious increases sooner. 

Attorneys who represent landlords have criticized the bill. “That definition of fraud [in the Rosenthal bill] is so vague and so overreaching that literally any mistake a landlord makes falls under that definition of fraud,” said attorney Deborah Riegel of Rosenberg & Estis PC. 

In practice, landlord lawyers said, the bill could reduce rents dramatically and result in rent stabilized buildings losing much of their value, scaring off potential lenders. “Many of the rents would be pretty much half what they are now,” said Nativ Winiarsky of  Kucker Marino Winiarsky & Bittens. 

But tenant attorneys say the current fraud standard is nearly unusable for their clients. 

“If the fraud is in the lease and the rent registration—and had someone gone and consulted an attorney it would have come to light—then you can’t make a fraud allegation,” said Ellen Davidson of the Legal Aid Society, who consulted on the bills. 

Not all fraud claims would automatically succeed if Rosenthal’s bill passed, Davidson added, citing a 2014 Court of Appeals decision in a case called Boyd, in which the tenant alleged her rent had been fraudulently increased because her landlord overvalued the cost of her apartment renovation. The appeals court did not find fraud. 

“It would need to have been more systemic,” Davidson said. “One oddity, one thing only that the landlord didn’t follow the law on, isn’t enough to show fraud.” 

The Rosenthal legislation would also codify recent updates to the Rent Stabilization Code, including clarifications on when a tenant can stay in a stabilized apartment after their relative moves out and limits on rents in combined, or “Frankensteined” apartments.  

The second bill on Hochul’s desk is cosponsored by Bronx Assemblymember Jeffrey Dinowitz and aims to clarify how many years of rent history a tenant can review for potential error without alleging fraud. 

Prior to the passage of the Housing Stability and Tenant Protection Act (HSTPA), that window was four years. However, Part F of the 2019 law expanded the window to six years, with the cushion that courts can further consider all rent history “reasonably necessary” to determine the legal rent. 

But in 2020, landlords secured a major win in the Regina case, which found that if a tenant wanted to determine whether they had been overcharged prior to the passage of the HSTPA, they had to use the old methodology. According to the Regina decision, retroactively holding landlords liable for past actions violated their due process. 

Under the Dinowitz legislation, tenants would be able to use the HSTPA standard to determine their legal rent going forward—just not to win back years’ worth of overpaid rent. 

Prior to the HSTPA, said Riegel of Rosenberg & Estis, landlords could destroy certain rent records that might help them challenge future claims under the Dinowitz bill. 

“You were entitled to destroy your records, you did, you complied with the law,” she said. “But now the tenant can come forward and argue that there was a mistake in the calculation of the rent, or your improvements didn’t cost what you reported they cost, and you’ve got no way to prove it.” 

On Dec. 13, Kavanagh declined to talk about negotiations with the governor’s office over the two bills, but said they have a straightforward goal in common. 

“We’re really just trying to clarify that… if a landlord is raising the rent unlawfully, that the courts, or HCR… ought to be able to come back and demonstrate that that’s what’s going on and set the rent properly,” he said.

But the differences between the bills are notable, said Davidson of Legal Aid. She predicted that, of the two, the Dinowitz bill could have a broader reach. 

“The Rosenthal bill, you have to have a claim of fraud to get into the discussion of what that bill does,” she said. The Dinowitz bill, by contrast, could help tenants reset their rents in the absence of a fraud allegation—“that would affect a larger group of people.”

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