Legal Services attorneys continue to work the front lines protecting tenants from predatory landlords. Two recent court cases have building owners thinking twice about committing fraud in order to swindle money from tenants.
For the poorest tenants, obtaining a government subsidy to pay escalating rents is often the difference between homelessness and a stable apartment. Unfortunately, some landlords take advantage by exacting so-called “side deals,” or fraudulently charging the tenant in excess of the subsidized lease agreement or the legal regulated rent (for rent-regulated apartments).
“[Side deals] are very common, maybe even routine,” said James Jantarasami, a Bronx-based Legal Services New York City staff attorney. “The city doesn’t check what the legal regulated rent is. Tenants are desperate to rent an apartment and willing to sign on.”
In a case settled a couple of months ago, Jantarasami said he represented a domestic violence victim who was pinned by a side deal while trying to move out of a city homeless shelter. In Assoc v. CW, the tenant was receiving Housing Stability Plus rental assistance from the city’s Department of Homeless Services. Through a real-estate broker, she had negotiated a lease agreement for $820 a month, which her government rental subsidy would be able to cover in full. However later in the same day, the landlord’s managing agent foisted a new lease for $1,150 upon her. The landlord did not turn over the keys to the apartment until the tenant signed the more expensive lease.
The judge in the case found the landlord’s actions “unconscionable” and that the real-estate broker and landlord’s managing agent had “forced respondent to choose between signing the $1,150 lease … and being left homeless with her child.”
The apartment was infested with bedbugs. The tenant received a judgment of $18,845.80 for the overcharge and an additional $9,020 for the bedbug nightmare.
Another case that should pique tenants’ interests is Sylvie Grimm v. 151 Owners Corp. Tenant attorneys have hope that the case will abolish the arbitrary four-year limit to claim a rent overcharge. On Sept. 24, the First Department of the New York Supreme Court Appellate Division found that when a landlord commits fraud to increase the rent, the courts and state housing agency are no longer barred from looking at records from more than four years prior to the tenant filing a complaint. Currently, tenant rent-overcharge complaints are thrown out of court if the overcharge occurred more than four years before the complaint was filed. The landlord could still appeal.
Fraud often occurs when a landlord falsely reports expensive renovations to a rent-stabilized apartment in order to justify increasing the rent to more than $2,000 a month, the point at which the apartment can be deregulated. Once an apartment is deregulated, there are no restrictions on rent increases and the new tenant has little to no housing rights. Landlords can jack up the rent by the amount equal to 1/40 the costs of the renovations. Tenant advocates believe landlords also inflate the renovation costs and charge that the state housing agency does little to investigate the fraud. The appellate judges in the Grimm case agreed, and found the landlord overcharged the tenants and that the state housing agency “acted arbitrarily, capriciously and in disregard of its obligation in failing to consider whether the rent charged to petitioner was unlawful.”
“Grimm has the potential to be a sea change,” said Kenneth Hawco, the attorney who litigated the case. “[Landlords] won’t be able to hide behind the statute of limitations if they committed fraud.”
Bennett Baumer works as a tenant organizer on the West Side of Manhattan.