The Real Deal New York

David Bistricer wins appeal against tenants in deregulation suit

Tenants at 50 Murray had won their lawsuit against the landlord in July
By Chava Gourarie | January 19, 2018 01:30PM

David Bistricer and 50 Murray Street (Credit: CityRealty)

David Bistricer’s Clipper Equity won an appeal against tenants at 50 Murray Street who claimed that the landlord had illegally deregulated their units, according to an appellate decision entered Thursday.

The win overturns a ruling by a New York State Supreme Court judge that Clipper had overcharged the more than 40 tenants on rent while receiving tax breaks from the city under a program known as 421g.

The appellate decision could be a big win for landlords and developers, as it’s the first ruling on the appellate level regarding the deregulation of 421g apartments, an issue that’s been playing out in the courts for years with contradictory results.

Like tax incentives such as 421a and J-51, landlords who receive the 421g benefit must cap apartment rent increases at levels set annually by the Rent Guidelines Board. At issue in this case is whether 421g apartments are subject to luxury decontrol, which allows landlords to deregulate units once their rent exceeds a set threshold, currently $2,700.

In July, Judge Carol Edmead ruled that 421g apartments were in fact subject to luxury decontrol, based on a clause in the rule’s language that apartments should be stabilized “notwithstanding the provisions of any local law for rent stabilization …” Her ruling contradicted an earlier case on the same issue at 85 John Street. In that case, a judge ruled against two tenants whose rent had jumped by more than $2,000, and accepted the landlord argument that rent-stabilization rules apply to 421g buildings in the same manner as other stabilized units.

The appellate division rejected Edmead’s argument, ruling that the clause in question needed to be taken in context of the rent guidelines already in place.

The tenants will be appealing the decision immediately in the Court of Appeals, according to their attorney Serge Joseph.

Clipper was not immediately available for comment. Representatives for Clipper and the 50 Murray tenants were not immediately available for comment.