Bill Text: NY A04047 | 2023-2024 | General Assembly | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

---

Bill Title: Relates to applying the Housing Stability and Tenant Protection Act of 2019 to rent calculations and rent records maintenance and destruction for all rent stabilized apartments.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Introduced) 2023-06-20 - substituted by s2943b [A04047 Detail]

Download: New_York-2023-A04047-Amended.html

---

                STATE OF NEW YORK
        ________________________________________________________________________

                                         4047--A

                               2023-2024 Regular Sessions

                   IN ASSEMBLY

                                    February 9, 2023
                                       ___________

        Introduced by M. of A. DINOWITZ -- read once and referred to the Commit-
          tee   on  Housing  --  committee  discharged,  bill  amended,  ordered
          reprinted as amended and recommitted to said committee

        AN ACT to apply the Housing Stability and Tenant Protection Act of  2019
          to rent calculations and rent records maintenance and destruction

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. Legislative findings.  The  legislature  hereby  finds  and
     2  declares that:
     3    (a)  the  pool of rent regulated apartments in New York state contains
     4  an unacceptably high number of apartments in which the current rents are
     5  based on prior rents that exceeded the legal regulated rent at the  time
     6  they were charged, but for which remedies were limited  under the law in
     7  effect  before  the  effective  date of the Housing Stability and Tenant
     8  Protection Act of 2019 (HSTPA);
     9    (b) it is public policy prospectively to reduce, insofar as  possible,
    10  those  rents  to  a  level in line with what they would have been in the
    11  absence of the unlawful rent setting and deregulations that were permit-
    12  ted under prior law to go unremedied, and therefore to impose  the  rent
    13  calculation  standards  of  the HSTPA prospectively from the date of its
    14  enactment, including in cases where the pre-HSTPA rent has already  been
    15  established by a court or administrative agency;
    16    (c)  the  purpose  of  the  prospective application of the penalty and
    17  record review provisions of  the  HSTPA  is  to  prevent  the  perpetual
    18  collection  of  unlawful and inflated rents, and to encourage the volun-
    19  tary registration of any rent stabilized apartment for which  any  prior
    20  annual  registration  statement has not been filed, and to encourage the
    21  voluntary recalculation of unreliable pre-HSTPA rents;
    22    (d) in light of court decisions  arising  under  the  HSTPA  of  2019,
    23  including Regina Metro v. DHCR, it is public policy that the legislature

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD07241-03-3
        A. 4047--A                          2

     1  define  clearly  the  prospective  reach  of that law, and limit, to the
     2  extent required by the constitution, the retroactive reach of that law;
     3    (e)  despite Regina, the scope of the fraud exception to the pre-HSTPA
     4  four year rule for calculating rents remains unsettled and  the  subject
     5  of  litigation,  and courts have diverged from the controlling authority
     6  of Thornton v.  Baron and Grimm v. DHCR to impose  a  common  law  fraud
     7  standard  that  is not found in these cases and is inconsistent with the
     8  intent of the legislature to discourage and penalize fraud  against  the
     9  rent  regulatory  system  itself, as well as against individual tenants,
    10  and it is therefore public policy that the legislature  codify,  without
    11  expanding  or  reducing  the liability of landlords under pre-HSTPA law,
    12  the standard for applying that exception;
    13    (f) the New York state  division  of  housing  and  community  renewal
    14  (DHCR) misinterpreted the rent stabilization law for a significant peri-
    15  od  of  time with respect to the regulatory obligations arising from the
    16  receipt of J-51 and 421-a tax benefits resulting in the unlawful deregu-
    17  lation of tens of thousands of rent-stabilized apartments,  the  setting
    18  of  unlawful  rents,  and  the collection of millions of dollars of rent
    19  overcharges, during a housing emergency.   Both  landlords  and  tenants
    20  relied  upon  the  DHCR's  misinterpretation  of the law. In Regina, the
    21  Court of Appeals settled many of  the  issues  arising  from  overcharge
    22  claims by tenants who were misled into refraining from filing overcharge
    23  cases  during the period when DHCR's erroneous interpretation of the law
    24  was in effect, but left open the issue of whether a  landlord's  ongoing
    25  collection  of overcharges and failure to return apartments to rent-sta-
    26  bilization, after the law was clarified, should be treated as fraud;
    27    (g)  the integrity of the registration system for rent regulated hous-
    28  ing has been eroded by the use of  base  date  rents,  rather  than  the
    29  service  and  filing  of  reliable registration statements, to set rents
    30  under the law in effect between the enactment  of  the  Rent  Regulation
    31  Reform  Act  of  1997  and  the  HSTPA. It is therefore public policy to
    32  impose, prospectively from the date of the enactment  of  the  HSTPA,  a
    33  rent  calculation  formula  that, insofar as possible, derives the legal
    34  regulated rents for apartments  from  reliable  registration  statements
    35  served upon tenants and made available to the public; and
    36    (h) because pre-HSTPA law with respect to the maintenance by landlords
    37  of  rent  records was complex, and has an ongoing impact upon the calcu-
    38  lation of post-HSTPA rents,  it is necessary to codify the pre-HSTPA law
    39  that applied to the destruction of rent records prior to  the  enactment
    40  of  the  HSTPA,  and  to  define clearly the impact of such law upon the
    41  prospective calculation of rents under the HSTPA.
    42    § 2. (a) The legal rent for all rent  stabilized  apartments  for  the
    43  period  from  July 1, 2019 and thereafter shall be determined in accord-
    44  ance with Part F of the HSTPA. Where the legal regulated rent for a rent
    45  stabilized apartment for the period prior to  June  14,  2019  has  been
    46  determined  by  any  court  or administrative agency, that determination
    47  shall not foreclose a recalculation of the post-HSTPA rent, except  that
    48  any  pre-HSTPA  rent  that,  as of June 14, 2019, is lower than the rent
    49  that would be permitted to be charged under the HSTPA, shall  be  deemed
    50  to  be  the  lawful  rent under the HSTPA on June 15, 2019, and shall be
    51  used as the basis for calculating subsequent rents under the HSTPA;
    52    (b) Subdivision (a) of this section shall apply to all cases,  includ-
    53  ing those pending as of June 14, 2019 before any court, appellate tribu-
    54  nal,  or  administrative agency in which a claim for rent overcharges or
    55  rent arrears has been asserted with respect to rent stabilized  housing,
    56  the legal regulated rent for the period from June 14, 2019 and thereaft-
        A. 4047--A                          3

     1  er  shall  be  determined  in  accordance with Part F of the HSTPA.  The
     2  legal regulated rent for the portion of any overcharge  claim  involving
     3  rents  paid  prior  to June 14, 2019 shall be determined under pre-HSTPA
     4  law,  including the default formula in cases of fraud, as codified here-
     5  in.
     6    (c) Nothing in this  act,  or  the  HSTPA,  or  prior  law,  shall  be
     7  construed  as restricting, impeding or diminishing the use of records of
     8  any age or type, going back to  any  date  that  may  be  relevant,  for
     9  purposes  of  determining  the  status  of  any apartment under the rent
    10  stabilization law;
    11    (d) The legal regulated rent payable for the period prior to June  14,
    12  2019  shall  be calculated in accordance with the law in effect prior to
    13  the HSTPA, including the prior four year limitation on the consideration
    14  of rent records, and including the fraud exception  to  such  limitation
    15  and such other exceptions as existed under prior law and under the regu-
    16  lations of the New York state division of housing and community renewal.
    17  Nothing in this act shall be construed as limiting such exceptions or as
    18  limiting the application of any equitable doctrine that extends statutes
    19  of  limitations  generally.    With  respect to the calculation of legal
    20  rents for the period either prior to or subsequent to June 14, 2019,  an
    21  owner  shall  be  deemed to have committed fraud if the owner shall have
    22  committed a material breach of any duty, arising under statutory, admin-
    23  istrative or common law, to disclose truthfully to any  tenant,  govern-
    24  ment agency or judicial or administrative tribunal, the rent, regulatory
    25  status,  or lease information, for purposes of claiming an unlawful rent
    26  or claiming to have deregulated an apartment, whether or not the owner's
    27  conduct would be considered fraud under the common law, and  whether  or
    28  not a complaining tenant specifically relied on untruthful or misleading
    29  statements  in  registrations, leases, or other documents. The following
    30  conduct shall be presumed to have been the product of  such  fraud:  (1)
    31  the  unlawful deregulation of any apartment, including such deregulation
    32  as results from claiming an unlawful increase such as would have brought
    33  the rent over the deregulation threshold that existed under  prior  law,
    34  unless  the  landlord  can  prove  good faith reliance on a directive or
    35  ruling by an administrative agency or court; or (2) beginning October 1,
    36  2011, failing to register, as rent stabilized, any apartment in a build-
    37  ing receiving J-51 or 421-a benefits;
    38    (e) In accordance with the practice of the New York state division  of
    39  housing and community renewal prior to June 14, 2019, where fraud is not
    40  established,  base  rents  of apartments unlawfully deregulated shall be
    41  calculated as the average of rents for comparable rent stabilized apart-
    42  ments in the building, rather than the  default  formula  applicable  to
    43  cases involving fraud;
    44    (f)  For  the  period  prior  to June 14, 2019, neither the version of
    45  subdivision g of section 26-516 of the administrative code of  the  city
    46  of  New  York  then  in effect, nor the version of section 2523.7 of the
    47  rent stabilization code  (9  NYCRR  2523.7)  then  in  effect  shall  be
    48  construed  as  permitting the destruction of rent records for units that
    49  have not been properly and timely registered.  Where records  have  been
    50  permitted to be destroyed by virtue of proper registration, and no other
    51  law  required  the  maintenance of such records, and where the owner has
    52  proven that such records were  actually  destroyed  in  accordance  with
    53  prior  law  and that such destruction took place prior to June 15, 2019,
    54  the registration served and filed prior to such  lawful  destruction  of
    55  records shall be presumed to be reliable, for purposes of any post-HSTPA
    56  calculation  of the rent, but that presumption shall be rebuttable.  The
        A. 4047--A                          4

     1  parties shall be entitled to discovery  of  any  evidence  found  to  be
     2  reasonably  necessary  to  demonstrate  the  legal rent. Nothing in this
     3  paragraph shall be interpreted as authorizing  the  destruction  of  any
     4  record, that under prior law was relevant to establishing (1) the status
     5  of an apartment as regulated or unregulated; (2) the presence or absence
     6  of  fraud  with  respect  to  renting any housing accommodation; (3) the
     7  presence or absence of willfulness in the collection of overcharges; (4)
     8  the useful life of any item, the replacement of which is claimed by  the
     9  owner  to  qualify an apartment for a rent increase; (5) the duration of
    10  any tenancy, such as would establish whether an owner was entitled under
    11  prior law to a longevity increase; or (6) compliance with any law  that,
    12  independently  of  the  rent stabilization law, required or requires the
    13  maintenance of such records.   Where the  calculation  of  the  rent  is
    14  dependent  upon records that the owner has improperly destroyed, includ-
    15  ing where the records were destroyed without the apartment  having  been
    16  registered,  the rent shall be calculated in accordance with the default
    17  formula.
    18    § 3. This act shall take effect immediately.