Frequently Asked Questions on J-51/Roberts
Roberts v. Tishman Speyer
December 22, 2009
Q. What did the Supreme Court do in its December 14th Order?
A. Justice Lowe of the New York State Supreme Court approved an agreement between the attorneys for the named plaintiff tenants of the Roberts case and the attorneys for the current and former landlords and their lenders.
The agreement has three key facets:
(1) First, the parties agreed to stay the litigation for a period of up to six months in order to work through the significant issues at hand.
(2) Second, the rent bills for January and February 2010 for each apartment affected by the Court of Appeals decision will be set at the lower of (i) the current lease rent or (ii) the estimated rent-stabilized level that Tishman calculated for escrow purposes last March.
(3) During the period of the stay, each affected tenant will also be afforded certain rights available under the Rent Stabilization Law, including the right of renewal and succession rights.
Tishman Speyer and Met Life have also tentatively agreed to certification of the class, which is normally an arduous procedural process. If CW Capital, the special servicer now administering the landlord’s mortgage loan, agrees by the end of January, all of the above will continue through June 15, 2010.
Q. If my “Estimated Rent-Stabilized Rent” is higher than what I am currently paying does that mean my rent will go up?
A. No, your rent will not go up. If your estimated rent-stabilized rent is higher than what you are currently paying, you will continue to pay your current lower agreed upon rent. If your estimated rent-stabilized rent is lower than your current rent you will pay the new estimated rent-stabilized rent.
Q. What will happen if my lease is up for renewal during this “interim” period?
A. You will be offered a new lease at the same rent you are paying at that time, with an additional increase as allowed by the Rent Guidelines Board for that year. However, you should try to negotiate for the lowest rent possible, as the landlord has discretion to offer you a lower rent than the rent stabilization law requires. In no case will your rent even on renewal be higher than the estimated legal rent stabilized level.
Q. How was this “Estimated Rent-Stabilized Rent” determined?
A. The estimated rent-stabilized rent was tentatively calculated by Tishman Speyer.
The formula used involves taking the last stabilized rent for an apartment, and then adding a number of allowable increases to reach the estimated amount. These increases include an 18-20% increase for the initial vacancy, and an additional long-term vacancy increase which is determined by the length of time the last rent-stabilized tenant occupied the apartment. In addition, Tishman and Met Life added 1/40th of any claimed renovations done to the apartment. Finally, the owner has added annual increases as allowed by the Rent Guidelines Board for the intervening years since the apartment was deregulated.
We believe that this formula was sufficient for determining the escrowed amounts as well as the interim estimated rent-stabilized rent. But we emphasize it was only an estimate and the real rent stabilized rents, once finally calculated, could be higher or lower than the estimated rents.
Q. How will the final Rent-Stabilized Rent be Determined?
A. The final rent-stabilized rent must be calculated with precision based on the correct formula.
We are currently working to determine the exact formula that must be used. When we have this in hand we will require the owners to provide documentation for each increase they have claimed, including proof of any renovations that have been done. This process must be done for each unit by an independent expert in conjunction with the attorneys from all parties. We believe that it will lead to an accurate calculation of the correct rent-stabilized rent for each unit.
Q. What will happen if my final rent-stabilized rent is determined to be higher than what I am paying at that time?
A. If your ultimate rent-stabilized rent is determined to be higher than what you are paying at that time, you will be allowed to continue to pay your lower amount until the end of your lease term. At that point, the building owner will have the right to raise your rent to the new rent-stabilized rent plus any allowable Rent Guidelines Board annual increases. However, depending on market conditions, the owner may also choose to offer you a lower “preferential” rent, so, again, always try to negotiate the lowest rent possible.
Q. I am a former tenant, how does this new agreement affect me?
A. This agreement does not affect you at this time, except to the extent that the Consultant hired to do the rent calculations will help the attorneys to determine how much, if any, each former tenant may be owed. The Court of Appeals did not rule that past rent overcharges are in fact due and payable to any former or current tenant, but we hope and expect to recoup such overpayments through a settlement agreement between the parties (which could be agreed to within a few months) or by obtaining a judgment at the end of the litigation (which could take years).
Q. When will tenants have their escrowed funds returned to them?
A. We do not yet know the answer to this question. Currently the escrow account is controlled jointly by plaintiffs’ counsel and the landlord. If CW Capital approves by the end of January, the account will be turned over to the exclusive control of plaintiffs’ counsel, who may then ask the Court to make distributions.
Q. When will the landlord start renting vacant apartments again?
A. Tishman Speyer plans to start executing new renewals imminently. Tishman’s counsel has advised that once the backlog of renewals is completed, new leases for vacant apartments will again be issued.
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