Landlords may owe large sums; Time limit on payments for jacked-up rents overturned

A legal decision rendered two weeks ago could provide substantial windfalls for tenants who may have been paying more than they had to in order to live in their apartments. The victory came through the state appellate court, which ruled on July 13 that a landlord-friendly city regulation that had prevented tenants from receiving the full protection of the city’s rent control law was “null and void.” The regulation, which was passed by the rent stabilization and leveling board in 1988, gave tenants two years to find out if the rent they were being charged fell in line with the modest increases prescribed by the city’s rent control law. Until this month, tenants who did not take action in that window of time lost their right to a lower rent, even if the landlord knowingly skirted the law. Now, there is no statute of limitations. “Landlords loved this regulation because it allowed them to go around charging people illegal rents,” said Cathy Cardillo, the attorney who successfully argued the case on behalf of a pair of Hoboken residents, last week. “It was kind of a crapshoot for them. They just hoped that people would not find out until it was too late.” Typically, she explained, a new tenant would move into a building, unaware of the rent the previous tenants paid, and simply pay the market rate. It was a rare bird who actually took the trouble to call the Rent Leveling and Stabilization office and find out what the previous rent was and what the current rent ought to be. The city’s prevailing rent control law, passed in 1973, limits rent raises to a few percentage points per year. There is a part of that law that says that if a tenant who is in an apartment longer than three years leaves, then the landlord can raise the rent 25 percent. So, to use an example, an old woman might be paying only $500 per month for her one-bedroom apartment because it has been rent-controlled since the 1970s. She might leave, and the landlord would legally be allowed to raise the rent to $625. However, because of the real estate market, the landlord could probably get much more, and a tenant would have no idea about the legal rent. It is this disparity that has made the modern application of rent control so controversial. Attempts by the City Council to amend it over the years almost always have been overturned by tenant advocates. Could be thousands “People do not usually check into what their calculation should be unless something unusual happens,” Cardillo said last week. “There could be thousands of people out there entitled to something back.” Just how they ought to go about getting something back is the question. The city’s Rent Leveling and Stabilization Board is the logical first step for anybody who thinks that they may be paying more than they should in rent. And Carole McLaughlin, the office’s director, has her team ready to help tenants with the flood of new calculations that she expects as a result of this decision. The office can issue a ruling on how much a landlord owes. However, they can’t go out and force the landlords to pay up. “We are not an enforcement agency,” McLaughlin said last week. “We recommend that the tenant and the landlord come to an agreement, nothing more. Most people end up living rent-free for a little while to take care of the rebate.” Could hurt landlords who meant well Although nobody knows who is eligible for the rebates at this point in time, McLaughlin worries that a number of well-meaning landlords who have had the same tenants in their buildings since the rent control ordinance was passed in 1973 could be hit with strikingly diminished revenues. “There are people out there who are charging $500 or $600 for an apartment and they have tenants for years,” she explained. “Maybe they raise the rent $5 or $10 a year without checking the [Consumer Price Index, which dictates the percentage raise]. Now maybe it should have been $2 or $8. And all that adds up, especially if you have a few tenants. I talked to one landlord today who is out $20,000 just like that.” Many tenant advocates, including Cardillo, do not oppose the idea of having a limit on the amount of time that a tenant has to appeal his rent. The problem, they say, is that in Hoboken, unlike other cities with rent control ordinances such as Jersey City, the landlord is not required to notify new tenants of their rights. “We are not against any statute of limitations,” said Tom Olivieri, a tenant-landlord advocate who works in City Hall, “as long as the regulation also includes something that protects the tenant. They have to put in there that the real estate agent or the landlord must disclose that there is rent control in Hoboken. And that the rent has been declared to be so-and-so much. And that the tenants have so much time – whether it is two years or whatever – to act on it.” “But if the tenant is not informed, then there should be no time limit,” he added, “because up until now the landlords have been getting away with murder.” Olivieri estimated only about 100 tenants would be in a position to claim a rebate, and that most of them would not be the “old-timers” who have lived in Hoboken for years. Instead, he predicted that they would come from the relatively new stock of Hobokenites who began moving to the city in the 1980s and therefore may not have been so aware of the city’s rent control law and its protections. This was not the first time that this issue has surfaced in local courts. Cardillo won the decision after being rebuffed in the lower courts. Ira Karasick, a local attorney and one-time mayoral candidate, had also tried to have the regulation overturned on behalf of a different set of plaintiffs previously. After the ruling, Cardillo said that she was encouraged to persevere on behalf of her clients, thanks in part to her own experience with a landlord who had tried to overcharge her. “When I moved to Hoboken [in 1981] I had never even heard of the rent control ordinance,” she explained. “This was back before I became a lawyer. I was a single mother struggling with two kids and I was paying an illegal rent. Luckily I applied for my calculation a month before they passed this regulation in 1988. And my case was decided in my favor in 1992.”


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