S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4047
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 9, 2023
                                ___________
 
 Introduced by M. of A. DINOWITZ -- read once and referred to the Commit-
   tee on Housing
 
 AN  ACT to apply the Housing Stability and Tenant Protection Act of 2019
   to rent calculations and rent records maintenance and destruction
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Legislative  findings.  The  legislature hereby finds and
 declares that:
   (a) the pool of rent regulated apartments in New York  state  contains
 an unacceptably high number of apartments in which the current rents are
 based  on prior rents that exceeded the legal regulated rent at the time
 they were charged, but for which remedies were limited  under the law in
 effect before the effective date of the  Housing  Stability  and  Tenant
 Protection Act of 2019 (HSTPA);
   (b)  it is public policy prospectively to reduce, insofar as possible,
 those rents to a level in line with what they would  have  been  in  the
 absence of the unlawful rent setting and deregulations that were permit-
 ted  under  prior law to go unremedied, and therefore to impose the rent
 calculation standards of the HSTPA prospectively from the  date  of  its
 enactment,  including in cases where the pre-HSTPA rent has already been
 established by a court or administrative agency;
   (c) the purpose of the prospective  application  of  the  penalty  and
 record  review  provisions  of  the  HSTPA  is  to prevent the perpetual
 collection of unlawful and inflated rents, and to encourage  the  volun-
 tary  registration  of any rent stabilized apartment for which any prior
 annual registration statement has not been filed, and to  encourage  the
 voluntary recalculation of unreliable pre-HSTPA rents;
   (d)  in  light  of  court  decisions  arising under the HSTPA of 2019,
 including REGINA METRO V. DHCR, it is public policy that the legislature
 define clearly the prospective reach of that  law,  and  limit,  to  the
 extent required by the constitution, the retroactive reach of that law;

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD07241-01-3
              

 A. 4047                             2
 
   (e)  despite REGINA, the scope of the fraud exception to the pre-HSTPA
 four year rule for calculating rents remains unsettled and  the  subject
 of  litigation,  and  it is therefore public policy that the legislature
 codify, without expanding or reducing the liability of  landlords  under
 pre-HSTPA law, the standard for applying that exception;
   (f)  the  New  York  state  division  of housing and community renewal
 (DHCR) misinterpreted the rent stabilization law for a significant peri-
 od of time with respect to the regulatory obligations arising  from  the
 receipt of J-51 and 421-a tax benefits resulting in the unlawful deregu-
 lation  of  tens of thousands of rent-stabilized apartments, the setting
 of unlawful rents, and the collection of millions  of  dollars  of  rent
 overcharges,  during  a  housing emergency.   Both landlords and tenants
 relied upon the DHCR's misinterpretation of  the  law.  In  REGINA,  the
 Court  of  Appeals  settled  many  of the issues arising from overcharge
 claims by tenants who were misled into refraining from filing overcharge
 cases during the period when DHCR's erroneous interpretation of the  law
 was  in  effect, but left open the issue of whether a landlord's ongoing
 collection of overcharges and failure to return apartments to  rent-sta-
 bilization, after the law was clarified, should be treated as fraud;
   (g)  the integrity of the registration system for rent regulated hous-
 ing  has  been  eroded  by  the  use of base date rents, rather than the
 service and filing of reliable registration  statements,  to  set  rents
 under  the  law  in  effect between the enactment of the Rent Regulation
 Reform Act of 1997 and the HSTPA.  It  is  therefore  public  policy  to
 impose,  prospectively  from  the  date of the enactment of the HSTPA, a
 rent calculation formula that, insofar as possible,  derives  the  legal
 regulated  rents  for  apartments  from reliable registration statements
 served upon tenants and made available to the public; and
   (h) because pre-HSTPA law with respect to the maintenance by landlords
 of rent records was complex, and has an ongoing impact upon  the  calcu-
 lation of post-HSTPA rents,  it is necessary to codify the pre-HSTPA law
 that  applied  to the destruction of rent records prior to the enactment
 of the HSTPA, and to define clearly the impact  of  such  law  upon  the
 prospective calculation of rents under the HSTPA.
   §  2.  (a)  The  legal rent for all rent stabilized apartments for the
 period from July 1, 2019 and thereafter shall be determined  in  accord-
 ance with Part F of the HSTPA. Where the legal regulated rent for a rent
 stabilized  apartment  for  the  period  prior to June 14, 2019 has been
 determined by any court or  administrative  agency,  that  determination
 shall  not foreclose a recalculation of the post-HSTPA rent, except that
 any pre-HSTPA rent that, as of June 14, 2019, is  lower  than  the  rent
 that  would  be permitted to be charged under the HSTPA, shall be deemed
 to be the lawful rent under the HSTPA on June 15,  2019,  and  shall  be
 used as the basis for calculating subsequent rents under the HSTPA;
   (b)  Subdivision (a) of this section shall apply to all cases, includ-
 ing those pending as of June 14, 2019 before any court, appellate tribu-
 nal, or administrative agency in which a claim for rent  overcharges  or
 rent  arrears has been asserted with respect to rent stabilized housing,
 the legal regulated rent for the period from June 14, 2019 and thereaft-
 er shall be determined in accordance with Part F  of  the  HSTPA.    The
 legal  regulated  rent for the portion of any overcharge claim involving
 rents paid prior to June 14, 2019 shall be  determined  under  pre-HSTPA
 law,  including the default formula in cases of fraud, as codified here-
 in.
   (c) Nothing in this  act,  or  the  HSTPA,  or  prior  law,  shall  be
 construed  as restricting, impeding or diminishing the use of records of
 A. 4047                             3

 any age or type, going back to  any  date  that  may  be  relevant,  for
 purposes  of  determining  the  status  of  any apartment under the rent
 stabilization law;
   (d)  The legal regulated rent payable for the period prior to June 14,
 2019 shall be calculated in accordance with the law in effect  prior  to
 the HSTPA, including the prior four year limitation on the consideration
 of  rent  records,  and including the fraud exception to such limitation
 and such other exceptions as existed under prior law and under the regu-
 lations of the New York state division of housing and community renewal.
 Nothing in this act shall be construed as limiting such exceptions or as
 limiting the application of any equitable doctrine that extends statutes
 of limitations generally.   With respect to  the  calculation  of  legal
 rents for the period prior to June 14, 2019, an owner shall be deemed to
 have committed fraud if the owner shall have committed a material breach
 of  any  duty, arising under statutory, administrative or common law, to
 disclose truthfully to any tenant,  government  agency  or  judicial  or
 administrative  tribunal, the rent, regulatory status, or lease informa-
 tion, for purposes of claiming an unlawful  rent  or  claiming  to  have
 deregulated  an  apartment.   The following conduct shall be presumed to
 have been the product of such fraud: (1) the  unlawful  deregulation  of
 any  apartment,  including such deregulation as results from claiming an
 unlawful increase such as would have brought the rent over  the  deregu-
 lation  threshold  that existed under prior law, unless the landlord can
 prove good faith reliance on a directive or ruling by an  administrative
 agency  or court; or (2) beginning October 1, 2011, failing to register,
 as rent stabilized, any apartment in a building receiving J-51 or  421-a
 benefits;
   (e)  In accordance with the practice of the New York state division of
 housing and community renewal prior to June 14, 2019, where fraud is not
 established, base rents of apartments unlawfully  deregulated  shall  be
 calculated as the average of rents for comparable rent stabilized apart-
 ments  in  the  building,  rather than the default formula applicable to
 cases involving fraud;
   (f) For the period prior to June 14,  2019,  neither  the  version  of
 subdivision  g  of section 26-516 of the administrative code of the city
 of New York then in effect, nor the version of  section  2523.7  of  the
 rent  stabilization  code  (9  NYCRR  2523.7)  then  in  effect shall be
 construed as permitting the destruction of rent records for  units  that
 have  not  been properly and timely registered.  Where records have been
 permitted to be destroyed by virtue of proper registration, and no other
 law required the maintenance of such records, and where  the  owner  has
 proven  that  such  records  were  actually destroyed in accordance with
 prior law and that such destruction took place prior to June  15,  2019,
 the  registration  served  and filed prior to such lawful destruction of
 records shall be presumed to be reliable, for purposes of any post-HSTPA
 calculation of the rent, but that presumption shall be rebuttable.   The
 parties  shall  be  entitled  to  discovery  of any evidence found to be
 reasonably necessary to demonstrate the  legal  rent.  Nothing  in  this
 paragraph  shall  be  interpreted  as authorizing the destruction of any
 record, that under prior law was relevant to establishing (1) the status
 of an apartment as regulated or unregulated; (2) the presence or absence
 of fraud with respect to renting  any  housing  accommodation;  (3)  the
 presence or absence of willfulness in the collection of overcharges; (4)
 the  useful life of any item, the replacement of which is claimed by the
 owner to qualify an apartment for a rent increase; (5) the  duration  of
 any tenancy, such as would establish whether an owner was entitled under
 A. 4047                             4
 
 prior  law to a longevity increase; or (6) compliance with any law that,
 independently of the rent stabilization law, required  or  requires  the
 maintenance  of  such  records.    Where  the calculation of the rent is
 dependent  upon records that the owner has improperly destroyed, includ-
 ing where the records were destroyed without the apartment  having  been
 registered,  the rent shall be calculated in accordance with the default
 formula.
   § 3. This act shall take effect immediately.

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  4047--A
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 9, 2023
                                ___________
 
 Introduced by M. of A. DINOWITZ -- read once and referred to the Commit-
   tee   on  Housing  --  committee  discharged,  bill  amended,  ordered
   reprinted as amended and recommitted to said committee
 
 AN ACT to apply the Housing Stability and Tenant Protection Act of  2019
   to rent calculations and rent records maintenance and destruction

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Legislative findings.  The  legislature  hereby  finds  and
 declares that:
   (a)  the  pool of rent regulated apartments in New York state contains
 an unacceptably high number of apartments in which the current rents are
 based on prior rents that exceeded the legal regulated rent at the  time
 they were charged, but for which remedies were limited  under the law in
 effect  before  the  effective  date of the Housing Stability and Tenant
 Protection Act of 2019 (HSTPA);
   (b) it is public policy prospectively to reduce, insofar as  possible,
 those  rents  to  a  level in line with what they would have been in the
 absence of the unlawful rent setting and deregulations that were permit-
 ted under prior law to go unremedied, and therefore to impose  the  rent
 calculation  standards  of  the HSTPA prospectively from the date of its
 enactment, including in cases where the pre-HSTPA rent has already  been
 established by a court or administrative agency;
   (c)  the  purpose  of  the  prospective application of the penalty and
 record review provisions of  the  HSTPA  is  to  prevent  the  perpetual
 collection  of  unlawful and inflated rents, and to encourage the volun-
 tary registration of any rent stabilized apartment for which  any  prior
 annual  registration  statement has not been filed, and to encourage the
 voluntary recalculation of unreliable pre-HSTPA rents;
   (d) in light of court decisions  arising  under  the  HSTPA  of  2019,
 including REGINA METRO V. DHCR, it is public policy that the legislature

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD07241-03-3
 A. 4047--A                          2
              

 
 define  clearly  the  prospective  reach  of that law, and limit, to the
 extent required by the constitution, the retroactive reach of that law;
   (e)  despite REGINA, the scope of the fraud exception to the pre-HSTPA
 four year rule for calculating rents remains unsettled and  the  subject
 of  litigation,  and courts have diverged from the controlling authority
 of THORNTON V.  BARON and GRIMM V. DHCR to impose  a  common  law  fraud
 standard  that  is not found in these cases and is inconsistent with the
 intent of the legislature to discourage and penalize fraud  against  the
 rent  regulatory  system  itself, as well as against individual tenants,
 and it is therefore public policy that the legislature  codify,  without
 expanding  or  reducing  the liability of landlords under pre-HSTPA law,
 the standard for applying that exception;
   (f) the New York state  division  of  housing  and  community  renewal
 (DHCR) misinterpreted the rent stabilization law for a significant peri-
 od  of  time with respect to the regulatory obligations arising from the
 receipt of J-51 and 421-a tax benefits resulting in the unlawful deregu-
 lation of tens of thousands of rent-stabilized apartments,  the  setting
 of  unlawful  rents,  and  the collection of millions of dollars of rent
 overcharges, during a housing emergency.   Both  landlords  and  tenants
 relied  upon  the  DHCR's  misinterpretation  of the law. In REGINA, the
 Court of Appeals settled many of  the  issues  arising  from  overcharge
 claims by tenants who were misled into refraining from filing overcharge
 cases  during the period when DHCR's erroneous interpretation of the law
 was in effect, but left open the issue of whether a  landlord's  ongoing
 collection  of overcharges and failure to return apartments to rent-sta-
 bilization, after the law was clarified, should be treated as fraud;
   (g)  the integrity of the registration system for rent regulated hous-
 ing has been eroded by the use of  base  date  rents,  rather  than  the
 service  and  filing  of  reliable registration statements, to set rents
 under the law in effect between the enactment  of  the  Rent  Regulation
 Reform  Act  of  1997  and  the  HSTPA. It is therefore public policy to
 impose, prospectively from the date of the enactment  of  the  HSTPA,  a
 rent  calculation  formula  that, insofar as possible, derives the legal
 regulated rents for apartments  from  reliable  registration  statements
 served upon tenants and made available to the public; and
   (h) because pre-HSTPA law with respect to the maintenance by landlords
 of  rent  records was complex, and has an ongoing impact upon the calcu-
 lation of post-HSTPA rents,  it is necessary to codify the pre-HSTPA law
 that applied to the destruction of rent records prior to  the  enactment
 of  the  HSTPA,  and  to  define clearly the impact of such law upon the
 prospective calculation of rents under the HSTPA.
   § 2. (a) The legal rent for all rent  stabilized  apartments  for  the
 period  from  July 1, 2019 and thereafter shall be determined in accord-
 ance with Part F of the HSTPA. Where the legal regulated rent for a rent
 stabilized apartment for the period prior to  June  14,  2019  has  been
 determined  by  any  court  or administrative agency, that determination
 shall not foreclose a recalculation of the post-HSTPA rent, except  that
 any  pre-HSTPA  rent  that,  as of June 14, 2019, is lower than the rent
 that would be permitted to be charged under the HSTPA, shall  be  deemed
 to  be  the  lawful  rent under the HSTPA on June 15, 2019, and shall be
 used as the basis for calculating subsequent rents under the HSTPA;
   (b) Subdivision (a) of this section shall apply to all cases,  includ-
 ing those pending as of June 14, 2019 before any court, appellate tribu-
 nal,  or  administrative agency in which a claim for rent overcharges or
 rent arrears has been asserted with respect to rent stabilized  housing,
 the legal regulated rent for the period from June 14, 2019 and thereaft-
 A. 4047--A                          3
 
 er  shall  be  determined  in  accordance with Part F of the HSTPA.  The
 legal regulated rent for the portion of any overcharge  claim  involving
 rents  paid  prior  to June 14, 2019 shall be determined under pre-HSTPA
 law,  including the default formula in cases of fraud, as codified here-
 in.
   (c) Nothing in this  act,  or  the  HSTPA,  or  prior  law,  shall  be
 construed  as restricting, impeding or diminishing the use of records of
 any age or type, going back to  any  date  that  may  be  relevant,  for
 purposes  of  determining  the  status  of  any apartment under the rent
 stabilization law;
   (d) The legal regulated rent payable for the period prior to June  14,
 2019  shall  be calculated in accordance with the law in effect prior to
 the HSTPA, including the prior four year limitation on the consideration
 of rent records, and including the fraud exception  to  such  limitation
 and such other exceptions as existed under prior law and under the regu-
 lations of the New York state division of housing and community renewal.
 Nothing in this act shall be construed as limiting such exceptions or as
 limiting the application of any equitable doctrine that extends statutes
 of  limitations  generally.    With  respect to the calculation of legal
 rents for the period either prior to or subsequent to June 14, 2019,  an
 owner  shall  be  deemed to have committed fraud if the owner shall have
 committed a material breach of any duty, arising under statutory, admin-
 istrative or common law, to disclose truthfully to any  tenant,  govern-
 ment agency or judicial or administrative tribunal, the rent, regulatory
 status,  or lease information, for purposes of claiming an unlawful rent
 or claiming to have deregulated an apartment, whether or not the owner's
 conduct would be considered fraud under the common law, and  whether  or
 not a complaining tenant specifically relied on untruthful or misleading
 statements  in  registrations, leases, or other documents. The following
 conduct shall be presumed to have been the product of  such  fraud:  (1)
 the  unlawful deregulation of any apartment, including such deregulation
 as results from claiming an unlawful increase such as would have brought
 the rent over the deregulation threshold that existed under  prior  law,
 unless  the  landlord  can  prove  good faith reliance on a directive or
 ruling by an administrative agency or court; or (2) beginning October 1,
 2011, failing to register, as rent stabilized, any apartment in a build-
 ing receiving J-51 or 421-a benefits;
   (e) In accordance with the practice of the New York state division  of
 housing and community renewal prior to June 14, 2019, where fraud is not
 established,  base  rents  of apartments unlawfully deregulated shall be
 calculated as the average of rents for comparable rent stabilized apart-
 ments in the building, rather than the  default  formula  applicable  to
 cases involving fraud;
   (f)  For  the  period  prior  to June 14, 2019, neither the version of
 subdivision g of section 26-516 of the administrative code of  the  city
 of  New  York  then  in effect, nor the version of section 2523.7 of the
 rent stabilization code  (9  NYCRR  2523.7)  then  in  effect  shall  be
 construed  as  permitting the destruction of rent records for units that
 have not been properly and timely registered.  Where records  have  been
 permitted to be destroyed by virtue of proper registration, and no other
 law  required  the  maintenance of such records, and where the owner has
 proven that such records were  actually  destroyed  in  accordance  with
 prior  law  and that such destruction took place prior to June 15, 2019,
 the registration served and filed prior to such  lawful  destruction  of
 records shall be presumed to be reliable, for purposes of any post-HSTPA
 calculation  of the rent, but that presumption shall be rebuttable.  The
 A. 4047--A                          4
 
 parties shall be entitled to discovery  of  any  evidence  found  to  be
 reasonably  necessary  to  demonstrate  the  legal rent. Nothing in this
 paragraph shall be interpreted as authorizing  the  destruction  of  any
 record, that under prior law was relevant to establishing (1) the status
 of an apartment as regulated or unregulated; (2) the presence or absence
 of  fraud  with  respect  to  renting any housing accommodation; (3) the
 presence or absence of willfulness in the collection of overcharges; (4)
 the useful life of any item, the replacement of which is claimed by  the
 owner  to  qualify an apartment for a rent increase; (5) the duration of
 any tenancy, such as would establish whether an owner was entitled under
 prior law to a longevity increase; or (6) compliance with any law  that,
 independently  of  the  rent stabilization law, required or requires the
 maintenance of such records.   Where the  calculation  of  the  rent  is
 dependent  upon records that the owner has improperly destroyed, includ-
 ing where the records were destroyed without the apartment  having  been
 registered,  the rent shall be calculated in accordance with the default
 formula.
   § 3. This act shall take effect immediately.