The Court of Appeals just shook the foundations of New York’s real estate industry by ruling against Tishman Speyer in a rent-regulation suit at Stuyvesant Town.
In a 4-2 decision, the court ruled that Tishman Speyer could not legally take some 6,785 apartments out of rent regulation because it was accepting a state subsidy called J-51 that exists to encourage renovations. As Eliot Brown explains, the decision is a sharp turn from how J-51 had been interpreted, and it could plunge the 11,000 complex–already teetering on the financial brink–into default.
No one is sure how many buildings are part of J-51, but it’s a safe bet that real estate attorneys will be busy for the foreseeable future. As the court itself noted:
Defendants predict dire financial consequences from our ruling, for themselves and the New York City real estate industry generally. These predictions may not come true; they depend, among other things, on issues yet to be decided, including retroactivity, class certification, the statute of limitations, and other defenses that may be applicable to particular tenants. If the statute imposes unacceptable burdens, defendants’ remedy is to seek legislative relief. Moreover, the dissent predicts that our decision will cause “years of litigation over many novel questions to deal with the fallout from today’s decision.” That the courts and litigants may experience some additional burden, however, is no reason to eschew what we view as the only correct interpretation of the statute