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Monday, January 4, 2010
Well, well, well. So Tishman Speyer has offered a select group of current rent stabilized tenants the opportunity to acquire apartments that are well below market rate. Meaning, even the old pre-J51 lawsuit RS tenants can get in on a "deal" that may look financially advantageous.
Not so fast, says the Tenants Association:
ALERT: There’s a Catch to the 100 Vacant Apartments Offer
The Catch for Traditional Rent-Stabilized Tenants
Tishman Speyer ("TS") recently announced that it will begin leasing approximately 100 vacant apartments to those who asked to be placed on a waiting list following the Court of Appeals decision in the J-51 case. Each of these 100 apartments is rent stabilized only until the expiration of the J-51 abatement period. Tenants who receive an offer and are tempted to accept should carefully consider the consequences, even though some of these 100 apartments will be offered at substantially below market rate.
A tenant whose apartment was stabilized prior to the recent J-51 court decision and who accepts an offer for one of these 100 apartments will be moving from a fully protected traditional rent-stabilized apartment into one whose rent-stabilized status will expire at the end of the term of the J-51 tax benefit period.
The Catch for Tenants Newly Rent-Stabilized, Formerly Market Rate
Those tenants who held market rate leases prior to the Court decision should also carefully consider the consequences of accepting an offer for one of the 100 apartments. Pursuant to J-51 regulations, the lease for an apartment that is rent stabilized as a result of the landlord having a J-51 abatement will remain rent stabilized for the life of the current tenancy unless the lease contains a J-51 clause. The J-51 clause is language required by the J-51 regulations that specifically advises the tenant that the apartment is rent stabilized pursuant to J-51 and that, upon expiration of the J-51 benefit period, it will return to market rate status.
Many current market rate leases do not contain the required language. An open legal issue in the J-51 litigation is whether the landlord can "cure" this defect by adding the required language to the lease. Your Tenants Association believes that the law does not allow the landlord to correct this defect. If the Courts agree with this position, the rent stabilized status of a formerly market rate-tenant whose current lease does not contain the J-51 clause, will be protected should the landlord seek to return that apartment to market rate when the J-51 period expires. If you accept one of the 100 apartments, which will surely contain the necessary clause in the lease, you will forfeit that privilege.
So, what'd you think? Jerry and Rob Speyer were Santa Claus this year?