October 28, 2023

According to the New York City Rent Guidelines Board 2023 Housing Supply Report, there are approximately an equal number of free-market (1,023,000) and Rent Stabilized (1,006,000) rental apartments in New York City. The hard part sometimes is knowing in which category an apartment is properly placed. This is so because there are so many illegally deregulated apartments and current law and pending legislation make it increasingly easy to push units back into regulatory coverage.

In this post, I use real anecdotes from my practice to explore my theory that, when tenant-lawyers pull the trigger on litigation regarding an apartment’s regulatory status too quickly, they can derail their client’s housing goals. I represent both landlords and tenants, so my understanding of how this all works is deeper and more nuanced than my counterparts who only represent one “side”.

In November 2021, a couple came to me who were renting a free-market apartment in New York City for $3,300 per month. Their lease was ending, and their landlord was offering a renewal at $4,800 per month.^* The new proposed rent was way more money than the couple were willing to pay. I conducted a Rent Stabilization Coverage Analysis for Tenants (ReS-CAT!) and determined there was a 75% chance that, if scrutinized by a court or DHCR, the apartment would be pushed back into Rent Stabilization. I asked them the most important question – What is your goal? Do you want to fight for a Rent Stabilized lease? Do you want a “buyout” for leaving early and abandoning your claims?

What they wanted was something that would be hard to obtain. They simply wanted the landlord to leave them alone. Not forever. They wanted to be left alone for the next year, to pay $3,300 with no rent increase, because this would be long enough to finish helping their twin daughters, who were then seniors in New York City public high schools, to get into college and get settled at college. These clients did not want a war, they did not care about the particular apartment, they were even willing to pay some more rent. Just not 45% more. They just needed space and time.

If I was any other tenant-lawyer I likely would have started a proceeding at DHCR or in State Supreme Court. Instead, I wrote the landlord a letter: explaining my analysis findings regarding the regulatory status of the apartment; explaining the client’s goal; and offering to pay $250 more per month in rent, in exchange for détente for a year.

The landlord said…“No!” They were going to show me. At this point, most other tenant lawyers would have started a proceeding at DHCR or in State Supreme Court, or, at the very least, given the tenants the devastatingly bad advice that they should withhold rent. The approach being – let’s get that landlord’s attention and show him we mean business! Very Suits, very LA Law.

I did none of those three things. Instead, I waited. I told the clients to keep their heads down, go about their lives, concentrate on their daughters’ college admissions, and pay the $3,300 per month rent on time.

The landlord’s lawyer sent me a nasty letter back. We talked on the phone a few times. He told me to look out for an eviction proceeding. Then, nothing. Literally…nothing.

As I write this, that was over two years ago. G-d willing, in the Spring, the twins will be halfway done with their college careers. The rent is still $3,300 per month. I recently reached out to the clients and told them that I was closing the file on my end. They agreed. They said, “I guess we won!”

If I had filed a proceeding or a lawsuit or instructed my clients to withhold rent and get sued, then the outcome would be so different. Maybe such moves would have led to a quick settlement that was favorable to my client? But that was only one possible outcome. The more likely outcomes would be that: (a) my clients spent a fortune on me and were only two-years through a six-year war over an apartment they do not care about that much; and (b) that the apartment would be forever tainted by the public nature of the lawsuit, thus precluding any possibility of the landlord settling or, doing just what it did, leaving my clients alone!

When I represent landlords, I have seen countless times how a landlord may be very willing to settle with a tenant, but the lawsuit filed by the tenant undercuts the landlord’s ability to give the tenant what she wants because it erodes the value of the asset. The lawsuit, which was filed to achieve a result, is the actual impediment to reaching the goal.

What’s the lesson? A cat is the apex predator. And cats sleep for 80% of the day! You do not always need to be doing something to be achieving something. Sometimes waiting and watching is your most powerful move.

Respectfully submitted,

Michelle Itkowitz

* Some details changed to protect the innocent.