The Price Law Firm Wins Appeal in NY Rent Overcharge Case

The Price Law Firm LLC prevailed in a recent appeal before the Appellate Term, First Department, determining that a tenant’s apartment was subject to rent stabilization and winning a remand to determine the amount of the tenant’s rent and the amount of the overcharge to be refunded.

The case of Goldman v. Malagic, 2014 NY Slip Op 24264 (1st Dept App. Term 2014) presented an interesting fact pattern. Mr. Malagic was the superintendent of a building in Manhattan and was put in possession of a rent stabilized apartment – with no rental obligation – during his time as the superintendent.

After several years a decision was made that Mr. Malagic would no longer be the superintendent but that he would be able to remain in possession as a rent-paying tenant. The landlord offered Mr. Malagic a free market lease (taking the position that the apartment was now free market) listing the rent as $2,000/month but charging Mr. Malagic a “preferential rent” of $1500/month.

After paying $1,500/month for a period of years, Mr. Malagic challenged his rent and his status.

The Housing Court determined that Mr. Malagic was a free market tenant and that the landlord was able to charge him any rent that the landlord chose.

Mr. Malagic, through The Price Law Firm LLC, appealed this adverse determination to the Appellate Term, First Department.

The issue presented was as follows: When a rent stabilized apartment is temporarily exempt from rent stabilization because it is occupied by a superintendent, the landlord may charge the next tenant (even if it is the former superintendent) a “first rent” meaning that it can be any rent that at arm’s length tenant is willing to pay. This, however, is provided that the tenant is offered a rent stabilized lease.

In the Malagic case the tenant was certainly charged a “first rent” but was not offered a rent stabilized lease. This failure to offer a rent stabilized lease led to the appellate determination that the Malagic tenancy was a rent stabilized one and also led to the remand for the determination of the legal rent and the overcharge to be collected.