In a decision reinforcing tenant protections across New York City, the Appellate Division, First Department, recently reversed a lower court’s refusal to certify a class in Stafford v A&E Real Estate Holdings, LLC. The ruling allows hundreds of tenants to collectively pursue claims against one of the city’s largest landlords for allegedly violating rent stabilization laws.
Tenants allege that A&E Real Estate Holdings and its affiliates engaged in a systematic effort to deregulate rent-stabilized units in 22 buildings acquired between 2012 and 2015. The complaint accuses the company of inflating or failing to properly document Individual Apartment Improvements (IAIs), and manipulating preferential rent agreements to push units past the legal threshold for stabilization—resulting in hundreds of apartments being unlawfully removed from rent protections.
The motion court had denied class certification, citing concerns over manageability and factual differences among the units. But the appellate panel found that the lower court misapplied the legal standards under CPLR 901 and 902 and failed to give the case the broad reading that class actions are meant to receive. Citing Maddicks v Big City Properties, the court emphasized that a common scheme of misconduct can justify class treatment, even if it manifests differently across individual cases.
The decision underscores the importance of class actions in housing disputes, especially when individual claims are too small to pursue alone. The court noted that over 550 apartments may have been affected by A&E’s practices. Without the ability to aggregate their claims, many tenants would face insurmountable legal and financial barriers.
A&E’s defense—that prior owners were responsible for the renovations—was rejected. The court clarified that under rent stabilization rules, the current landlord bears the responsibility for maintaining proper records and complying with legal obligations. The inclusion of tenants who may not have been harmed was also not a fatal flaw; such issues, the court said, could be addressed in later proceedings.
This ruling affirms that when tenants face widespread harm from a unified scheme, the courts are prepared to uphold protections and ensure accountability.
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The tenants are represented by Lucas A. Ferrara and Roger A. Sachar Jr. of Newman Ferrara LLP.
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DECISION
Stafford v A&E Real Estate Holdings, LLC
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