MAI v. SP 1143 SECOND LLC (2023)

Order, Supreme Court, New York County (Gerald Lebovits, J.), entered on or about May 3, 2023, which denied defendant's motion to dismiss the complaint in its entirety, and granted plaintiff's cross-motion for summary judgment to the extent of declaring that plaintiff's apartment is subject to rent stabilization, unanimously affirmed, without costs.

The court properly concluded that pursuant to Administrative Code of the City of N.Y. § 26–504(c), plaintiff's apartment unit reverted to the rent regulated status it had before defendant began receiving its J–51 tax benefits (see Matter of Bramwell v. New York State Div. of Hous. & Community Renewal, 147 A.D.3d 556, 556, 48 N.Y.S.3d 46 [1st Dept. 2017];  Matter of Schiffren v. Lawlor, 101 A.D.3d 456, 457, 955 N.Y.S.2d 44 [1st Dept. 2012];  see also Matter of Regina Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, 35 N.Y.3d 332, 361 n. 13, 130 N.Y.S.3d 759, 154 N.E.3d 972 [2020]).  This apartment did not revert to a deregulated status, as the unit has been rent stabilized since before the building began receiving the J–51 benefits.

We have considered and rejected defendant's argument that the 2019 repeal of former Administrative Code § 26–504.2 has an improper retroactive effect.  The repeal of that provision only affected the propriety of prospective relief, including defendant's ability to deregulate this unit after the J–51 benefits eventually expired in 2020 (see Regina Metro. at 365, 130 N.Y.S.3d 759, 154 N.E.3d 972).  Defendant had no vested right in deregulating this unit in 2019, when that provision was repealed (see Matter of Schutt v. New York State Div. of Hous. & Community Renewal, 278 A.D.2d 58, 58, 717 N.Y.S.2d 565 [1st Dept. 2000];  see also Matter of IG Second Generation Partners L.P. v. New York State Div. of Hous. & Community Renewal, 10 N.Y.3d 474, 482, 859 N.Y.S.2d 598, 889 N.E.2d 475 [2008];  300 Wadsworth LLC v. New York State Div. of Hous. & Community Renewal, 210 A.D.3d 454, 178 N.Y.S.3d 487 [1st Dept. 2022]).

Contrary to defendant's contention, the record is insufficient to determine that plaintiff has not been overcharged.  Since defendant has treated this apartment unit as deregulated following the expiration of the J–51 benefits, the amount of the overcharge, if any, will require an assessment of the regulated rent and a review of the rents actually charged.