This past week, KMWB received a number of winning decisions that are impactful to the real estate industry.
First, the firm prevailed on a motion to dismiss a putative class action case in which the tenants argued that a landlord should be penalized for offering their tenants limited rent concessions. The tenants argued that these rent concessions should be averaged into the legal rent charged and paid by the tenant, thereby creating a “net effective rent” that is lower than the initial legal regulated rent. As a result, the tenants argued, that the legal rents should be rolled back to reflect such lower rents, and therefore, the putative class members are entitled to overcharge damages. KMWB partner Nativ Winiarsky moved to dismiss the complaint and same was granted with the court adopting the arguments made by KMWB and holding:
One-time rent concessions have been found to be legitimate exercises of the rights afforded to landlords in setting initial legal regulated rents for apartments subject to rent stabilization and the buildings that are under the 421-a program . . . In other words, a landlord may provide a one-time concession, whereby zero rent is collected for up to three months in a one-year period, as long as they refer to waivers of specific months, and are not “prorated concessions”, or “preferential rents.” . . . Simply put, merely alleging that the landlord utilized the rent concession . . . and gleaned the benefit of not counting the concession towards the calculation of the initial legal regulated rent, is insufficient to make out a meritable cause of action.
In another case handled by KMWB partner Robert Moore and senior associate Samara Geller, the tenants in a non-payment sought to exploit their ability to continue Court-imposed stays by filing numerous ERAP appeals. In an important decision, the Housing Court rejected this litigation tactic, lifted the stay, and held:
To construe the ERAP stay as unchallengeable would be to create another scheme by which one party completely controls the progress and determination of a dispute. Such a result is unacceptable . . . Moreover, unlike the invalidated CEEFPA statute, nothing in the ERAP Statute deprives a party of the ability to challenge the stay. Finally, lifting the stay does not result in eviction but allows the case to proceed put the case back on for trial.
Do not resign yourself to accepting an ERAP stay pending appeal, as your case may be restorable now.