Easy Guide to J-51 Regulation
by Seth A. Miller
Collins Dobkin & Miller, LLP
277 Broadway, 14th floor
New York, NY 10007
phone: 212-587-2400

Who is affected?

Any tenant who lived in a building that received J-51 benefits during his or her tenancy is potentially rent regulated.

To find out whether a building received or receives J-51 benefits, go to http://www.nyc.gov/html/dof/html/property/property_tax_reduc_j_51.shtml.

Any tenant who moved into a building as a supposedly deregulated tenant might instead be rent-stabilized, if either (a) the building is now getting J-51 benefits, or (b) the building used to get J-51 benefits during the tenancy of the current tenant, and the tenant did not get notice, in the first lease and in every renewal, saying that the apartment can be deregulated when the benefits expire.

In addition, a stabilized tenant might be exempt from high-income deregulation if either (a) the building is now getting J-5 1 benefits, or (b) the building used to get J-5 1 benefits during the tenancy of the current tenant and the tenant did not get notice, in the first lease and in every renewal, saying that the apartment can be deregulated when the benefits expire.

Tenants who would be in these categories but who have left their supposedly deregulated apartments are affected too: if they left less than four years ago, they can sue for overcharges.

How will the rents be set?

At a minimum, the legal rent for affected tenants will he based on the rent paid four years ago, and that rent will be considered a stabilized rent, even if it is above $2,000. Tenant attorneys will be arguing that the rent should he set even lower, however, since this situation might fit within an exception to the "four-year rule," the rule that normally sets rents at the amount paid four years ago. The argument is that an exception should be made because the rent four years ago will in some cases clearly be the product of the illegal deregulation of the apartment. To get a rent adjustment, a tenant will have to file an overcharge complaint, bring a lawsuit, or join a lawsuit in progress.

What should I do?

Tenants will need to decide whether to file overcharge complaints with DHCR, or go to court. There is no substitute for speaking to a lawyer about this decision, since the costs, likely outcome, and benefits of different options are different in every case. Tenants who take no action at all risk having their rent permanently set at a higher amount than they could have gotten and never being able to recover some of their overcharges. They may also be forced to deal with the issue anyway, if the landlord ever tries to evict them as supposedly free-market tenants.