UWS tenants accuse Stellar of illegally deregulating apartments

A group of nine tenants is suing Stellar Management, alleging that their apartments were wrongfully deregulated and that they are owed several years worth of excessive rent payments.

Tenants of 50 West 97th Street on the Upper West Side filed a lawsuit against Stellar on Wednesday, claiming that the landlord failed to provide documentation to justify rent increases that ultimately deregulated their apartments. Stellar increased the rent, according to the lawsuit, through vacancy bonuses and individual apartment improvements (IAIs).

Based on the most recent rent registrations filed for these apartments, Stellar would’ve needed to pay tens of thousands of dollars — ranging from $46,852 to $84,909 — on each apartment to justify deregulating the units, the lawsuit claims.

A representative for Stellar declined to comment.

Changes to New York’s rent law, enacted on June 14, may play in the plaintiffs’ favor. The new law, the Housing Stability and Tenant Protection Act of 2019, requires landlords to maintain records on improvements to rent stabilized apartments for at least six years prior to the most recent rent registration filed with the state. The measure also significantly increases landlords’ exposure to hefty legal damages, stipulating that tenants could collect three times the amount of rent overcharged for six years prior to filing a complaint.

Additionally, the law lowers the threshold for bringing rent overcharge claims against landlords by specifically allowing tenants to question “unexplained” rent increases. In a July 1 decision in an unrelated case, a Bronx housing court judge notes “that a mere ‘unexplained’ increase in rent gives rise to an overcharge claim and may justify the granting of discovery.”

“Prior to this you had to show that there wasn’t just an unexplained increase, but there’s some indication that there’s been fraud,” said attorney Jennifer Rozen, who is representing the tenants. “The courts can go as far back as they need to to find the last reliable rent, which is fantastic because in this case, all of my clients moved in post-deregulation, and there’s a very clear line at which the apartment went from very reasonable, very rent stabilized to not rent stabilized at all.”

Stellar has faced similar claims at some of its other buildings. In February, a judge ruled that the landlord overcharged tenants at another Upper West Side building based on unsubstantiated apartment renovation costs. In that case, Stellar said it paid a contractor $71,000 for IAIs when it in fact hired an in-house employee to do the work, allegedly writing checks to three different shell companies that were controlled by the employee over a period of four years. While the court found that Stellar completed at least $26,000 worth of renovations, the landlord was unable to provide detailed invoices for the other costs. In an ongoing class action lawsuit, tenants accuse Stellar of misrepresenting the costs of renovations at 1795 Riverside Drive and routinely failing to register apartments with the Department of Homes and Community Renewal.