Exclusive: Lawsuit Claims LIC Landlord Illegally Overcharged Rent

A group of tenants residing in an apartment building in Long Island City have filed a class action lawsuit against their landlord, 30-02 Associates LLC, alleging that they have been engaging in illegal rent overcharges. Following an investigation conducted by the Housing Rights Initiative, a non-profit organization dedicated to exposing real estate fraud and advocating for the rights of tenants, it was revealed that tenants of this particular building, known as the Arc, have been systematically overcharged in their rent payments since the building was constructed in 2017.
The Housing Rights Initiative estimates that tenants are owed more than $20 million in refunds for rent overcharges and potentially millions more in future rent reductions. The investigation found that the landlord received over $3 million in tax credits in 2021 alone, despite failing to comply with the requirements of the 421-a program, which mandates the registration of units with the New York State Division of Housing and Community Renewal (DHCR) and requires them to be treated as rent-stabilized units.
Despite regulations stipulating that all rent increases should be based on the initial rental amount paid by tenants, the landlord allegedly registered initial rents at inflated prices, denying tenants the protections afforded by rent-stabilization laws. By utilizing strategies such as early occupancy concessions and misrepresenting initial rents, 30-02 Associates LLC was able to manipulate rent increases above allowable limits, ensuring that an accurate and fair rent was never established for tenants of the Arc.
The class action lawsuit also alleges that preferential rent agreements were manipulated by the landlord, in direct violation of the Housing Stability and Tenant Protection Act of 2019 (HSTPA). Tenants reported instances where preferential rent amounts were misrepresented and subsequently increased during lease renewals, effectively bypassing the protections provided by the HSTPA and the Rent Guidelines Board. Real estate attorney Roger Sachar, representing the tenants, notes a concerning trend among landlords violating rent regulations, with many similar cases involving the Lightstone Group, which owns 30-02 39th Ave.
Legal representatives Sachar and Newman Ferrara LLP partner Lucas Ferrara criticize the lack of enforcement by state and local governments in addressing landlord misconduct, leading to an increase in landlords exploiting loopholes in rent regulations. They argue that fines imposed on landlords are often inadequate deterrents and suggest that more severe penalties, including the possibility of jail time, may be necessary to curtail these practices. As Ferrara points out, these landlords benefit from tax incentives intended to provide affordable housing, yet fail to fulfill their obligations, resulting in substantial financial losses for tenants and the perpetuation of illegal rent practices.