A bill introduced in response to ProPublica’s reporting would make
landlords liable for up to 10 times the amount of overcharges imposed on
tenants in rent-stabilized apartments.
New York landlords who overcharge tenants in rent-stabilized apartments would face sharply higher financial penalties under new legislation unveiled in Albany.
The bill was introduced Tuesday by Sen. Brad Hoylman and Assemblywoman Linda Rosenthal, both Democrats. It was prompted by ProPublica’s reports that up to 200,000 apartments
that should be registered for rent stabilization in New York City
aren’t, and that city and state officials have failed to police landlords who share in more than $1 billion in property tax breaks in return for limiting rents.
Rent-stabilized apartments afford tenants rights such as
caps on annual rent increases and eviction protection. But decades of
weak enforcement, lack of strong penalties and confusion have allowed
many building owners to simply not bother registering with the state as
the law requires.
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The new bill would increase penalties for overcharging tenants to
five times the overcharge for a first violation and 10 times the
overcharge for a repeat offense, plus interest. Current law doesn’t
discriminate between first-time and repeat offenders and limits
penalties to three times the overcharge.
Even triple damages can add up to large penalties if tenants prevail in court. One tenant recently won an $877,000 refund
from his landlord for overcharges in a rent-stabilized apartment on the
Upper West Side. The apartment was subject to rent limits because the
owner received a city tax break.
Hoylman said he hoped increased penalties would force more landlords
to comply with the rent-stabilization laws. “Just the mere fact of
heavier fines, I think, will give landlords pause,” he said.
Rosenthal also has a related bill,
A2234, that would impose a fine of $2,000 per apartment for failing to
register. Several New York City council members, also citing
ProPublica’s reporting, have introduced legislation to impose a similar fine for not registering.
“It has to be painful; otherwise, it’s just chalked up as ‘cost of doing business,’ ” Rosenthal said.
The Rent Stabilization Association, which represents New York City
property owners, declined to comment. Katie Goldstein, executive
director of Tenants & Neighbors, the statewide tenants’ rights
group, said she supports upping the overcharge penalty because
“unscrupulous landlords are currently operating in an environment where
they intentionally break the laws, and there are no consequences.”
Ellen Davidson, a tenant attorney with the Legal Aid Society, also
welcomed the legislation but said that “with increased penalties needs
to come increased enforcement.” Historically, city and state regulators
have not aggressively enforced rent-stabilization laws, leaving tenants
to fend for themselves.
The lax enforcement contributes to a huge gap in the number of
apartments that should be stabilized but may not be. In November,
ProPublica estimated that 50,000 apartments receiving property tax
breaks under two programs — known as 421-a and J51 — had been left out
of rent stabilization.
For more than two decades, New York City has estimated that there are
about 1 million rent-stabilized apartments in the city. But state data indicate
that, since 1994, the number of apartments actually registered has
hovered between 804,000 and 870,000 — a difference of close to 200,000
units.
“This is an issue that I’ve been looking at for a while, hearing —
largely anecdotally — that landlords were removing rent-stabilized
apartments, in many cases willfully, off the books,” Hoylman said. “Now
we have concrete evidence that not only it’s happening, but that it’s
happening at a worrisome pace.”
With New York City Mayor Bill de Blasio aiming to add and preserve 200,000 units
of affordable housing over the next 10 years, Rosenthal said the city
should first make sure that every apartment that is supposed to be
rent-stabilized is in compliance with the law.
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