Appelate Court decision could mean landlords can charge higher rents

Real Estate Weekly, Nov 13, 2002

Landlords for rent-stabilized buildings would gain more power flexibility if the state's highest court upholds a decision that allows owners to increase rents as long as they made building improvements and can document those expenses. But one of the city's best known real estate attorneys says that if the New York State Court of Appeals upholds the ruling, it could lend itself to abuse.

Before the end of the year, the court will decide whether a Manhattan resident in a rent-stabilized building owes her former landlord almost $50,000 in back rent, after a divided Appellate Court last January reinstated a New York State Division of Housing and Community Renewal determination in a dispute over the laws governing rent stabilized apartments. Arguments were heard in the case on Oct 8.

Finkelstein Newman LLP partner Daniel Finkelstein, known in New York real estate circles as the "dean of landlord-tenant law" for his nearly 50 years as a real estate attorney, said that some tenants in rent stabilized buildings are facing larger rent bills which may force them out of their homes, due to the Appellate Division ruling. That ruling allows landlords to submit evidence of improvements and expenses years after they've been originally incurred.

"While this closely-watched case is certainly good for landlords who may have lost or misplaced documents of legitimate expenses, this decision, if upheld by the New York Court of Appeals, could be abused by unscrupulous landlords," said Finkelstein, editor of the acclaimed Landlord-Tenant Practice Reporter. But Finkelstein, who also teaches landlord-tenant law at New York Law School, added: "Tenants are not without a remedy. They are still able to attack the competency and admissibility of the evidence submitted by landlords, such as when the evidence lacks any type of foundation whatsoever; was created years after the alleged repair work was performed; is nothing more than a summary of the purported work performed, includes no supporting documentation whatsoever, and if the evidence contradicts the landlord's prior assertions or submissions."

Finkelstein further noted that while the Appellate Division held that there was no prejudice in the D.H.C.R.'s delay in adjudicating the tenant's Fair Market Rent Appeal, he was surprised that the court "was virtually silent on the second component of the analysis--the agency's consideration of new evidence on an administrative appeal."