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Court Ruling Suspends Minimum Rent Adjustments

Under RGB Order No. 40 &41

Several weeks ago, State Supreme Court Justice Emily Jane Goodman, in a case known as Casado v. RGB, struck down the dollar-based minimum rent adjustments (as opposed to percentage-based) authorized by the Rent Guidelines Board (RGB) in its 2008 and 2009 guideline orders for apartments which had not had a vacancy lease in six years or more.  The City's Law Department, which represents the RGB, then sought a stay from the Appellate Division so that owners and tenants could continue to rely upon those guideline orders while the case was appealed; unfortunately, the Appellate Division refused to grant the stay.   

Justice Goodman’s decision striking down the minimum rent adjustments is in effect. The City, supported by RSA, is appealing Justice Goodman’s decision.

What Does this Mean for Owners?

  • The refusal to grant the stay means that rents for the past two years which were based upon the minimum dollar adjustments are, as of now, considered to be unlawful. 
  • If the lower court ruling is upheld, owners who continue to charge the higher amounts may be liable for overcharges and treble damages for the higher rents charged retroactively and collected in the future. 
  • Owners should consult with their attorneys regarding how best to proceed. 

Some owners may choose to continue to collect the higher amounts and await the final outcome of the case in the courts and to address any overcharge claims by tenants as they arise.  Others may choose to reduce rents by the appropriate amounts going forward and consider how to address the prior rents collected.  Additionally, it is possible that the appellate courts could reverse Justice Goodman’s decision and re-instate the minimum dollar adjustments authorized by the RGB. 

Rent Registration

The ongoing rent registration process, which is intended to reflect a snapshot of the rents charged on April 1, is also affected. 

  • It is unclear whether owners should register the rents which are now considered unlawful, even though those were the rents were legal on that date. 
  • It is also unclear whether owners should register the lower rents based upon percentage increases, given that this litigation is far from over and that the lower rents were not, in fact, charged on April 1. 

This situation is very much in flux.  Owners should consult their attorneys as to how to proceed and follow updates on this website.  If you have any questions, please call RSA at 212-214-9244.