Dugan v. London Terrace Gardens, L.P., 2019 NY Slip Op 06578 (1st Dept. 2019).

Around 1993, the landlord began deregulating apartments in the London Terrace complex, pursuant to the Rent Regulation Reform Act of 1993, where the rent or tenants’ incomes exceeding the statutory threshold allowable for deregulation.

Subsequently, in 2009, a milestone decision concerning building owners that receive tax benefits for building rehabilitations – J51- thwarted the landlord’s plan to deregulate units. The Court in Roberts v. Tishman Speyer Props., L.P., ruled that the apartments in buildings receiving J-51 benefits, need to be registered with the Division of Housing and Community Renewal (“DHCR”), and where covered by rent stabilization, for at the very least, during the period that the owner continued receiving these tax benefits.

However, the London Terrace had already deregulated close to 100 apartments when it began receiving J-51 benefits. Even though the owner received these benefits, the owner failed to return the units that had been deregulated back into rent-regulated status.

The Court in Dugan upheld the lower court’s decision ruing that Roberts should be applied retroactively in rent overcharge cases. For example, under the prior rent overcharge law, the first department frequently limited their review of a DHCR rental history to the four (4) year period preceding the filing of the alleged overcharge complaint. However, in Dugan, the Court ruled that the new rent overcharge law, HSTPA, “now explicitly provides that a court ‘shall consider all available rent history which is reasonably necessary’ to investigate overcharges and determine the legal regulated rent.” RSL § 26-516(a) and (h).

In fact, the Court in Dugan highlighted the types of records that may be examined in determining legal regulated rents and overcharges: (1) rent registration and other records filed with DHCR or other government agencies, regardless of the date to which the information refers; (2) orders issued by government agencies; (3) records maintained by the owner or tenants; and (4) public records kept in the regular course of business by any government agency.

Impact of Dugan Decision

The Dugan decision makes it clear that there is no limit on the examination period of an apartment’s rental history. In its analysis, a Court may go as far as back as it would like to determine a reliable registered rent under the HSTPA. Furthermore, any unexplained increases in the rent may render the registration unreliable. For example, even if a landlord may have made necessary improvements to surpass the deregulation threshold, if the landlord is unable to produce the records in support of those improvements, the rent will likely be deemed unreliable, thereby exposing the landlord to considerable damages.

The information above is intended to provide limited information only and is not legal advice. The laws relating to rent overcharge in New York are complex. If you are a party to a matter concerning a rent overcharge and otherwise need further guidance in this or a related area of law, Singh & Rani, LLP can assist you. Attorney advertisement. Prior results to not guarantee similar outcome.


Bikram Singh

Mr. Singh has been practicing law in the New York State and Federal Courts for more than 11 years. He was a principal attorney at Bikram Singh Law, P.C., after graduating with honors from Touro College Jacob D. Fuchsberg Law Center in 2008.