Newman Ferrara’s Class Actions Target Improper Rent Practices in 421-a Buildings
As reported by The Real Deal on October 19, 2026, Newman Ferrara LLP has filed a number of class-action lawsuits in recent months against owners of buildings that received New York’s 421-a tax benefits. The suits allege that landlords improperly used rent concessions to overcharge tenants and circumvent rent-stabilization rules.
Roger A. Sachar, one of the firm’s partners, is pursuing these cases on behalf of the impacted tenants. The Real Deal noted that recent filings name high-profile owners and operators, including a building at 420 Kent Avenue in Williamsburg associated with former Governor Eliot Spitzer (an 857-unit development where Housing Rights Initiative estimated potential exposure as high as $30 million), as well as properties managed by Black Spruce Management, Blackstone, AvalonBay, and Douglaston Development.
The Legal Foundation
Buildings that receive 421-a tax abatements must provide rent-stabilized housing. After the Housing Stability and Tenant Protection Act (HSTPA) took effect in 2019, landlords could no longer freely revoke “preferential rents” (amounts charged below the legal regulated rent) and jump to the higher legal maximum upon renewal.
Many owners continued offering rent concessions—such as one or more free months—while registering or treating a higher gross rent as the legal base. The practical effect was often the same as charging a preferential rent while preserving the ability to raise rents more aggressively later.
A March 2026 decision by the Appellate Division, First Department, in Grey v. LIC Development Owner, L.P., clarified the rules for concessions offered after the HSTPA. The court treated post-HSTPA concessions as the functional equivalent of preferential rents. As a result, subsequent increases must be calculated from the actual rent charged and paid (after the concession), not from a higher advertised or registered figure. The decision has become a key precedent in the current wave of cases, as The Real Deal observed in describing how recent rulings have placed rent concessions in the crosshairs.
Earlier efforts by tenants and their counsel sometimes faced dismissal or difficulty obtaining class certification. More recent appellate rulings, including Grey and related decisions, have strengthened the legal basis for these claims and encouraged broader enforcement.
Scope and Potential Impact
The lawsuits typically examine advertised rents (often on platforms such as StreetEasy) alongside the actual amounts tenants paid after free months or other discounts. Because they are class actions, alleged overcharges can be multiplied across many units. Individual monthly differences of several hundred dollars or more, sustained over years and applied to hundreds of apartments, produce significant claimed damages. Successful cases may also result in the resetting of legal rents going forward, limiting future increases.
The Real Deal reported that some owners are already being advised to discontinue concession practices to reduce risk. At the same time, certain buildings continue to market units with fractional-month concessions or other incentives, leaving open questions about how courts will treat newer variations.
Housing Rights Initiative and other tenant advocates have identified quite a few 421-a buildings they believe are out of compliance with rent-stabilization requirements. The current litigation draws on both public records and tenant reports, and a broader coalition has been working to identify additional affected classes.
Newman Ferrara’s Approach
Roger Sachar, who joined the firm in 2016, has focused much of his practice on representing tenants, consumers, and others in class actions involving rent regulation. He has successfully argued before the New York Court of Appeals and obtained notable appellate victories on issues of class-action standards, deregulation, and rent overcharges. The firm’s recent 421-a filings build on that experience and on favorable post-HSTPA case law.
Newman Ferrara has long represented both major property owners and tens of thousands of residential tenants. These cases reflect the firm’s commitment to enforcing the specific conditions attached to substantial public tax benefits: when owners accept 421-a advantages, they must comply with the accompanying rent-stabilization obligations.
Tenants who received rent concessions in a 421-a building, particularly since mid-2019, may wish to review their leases, renewal offers, and payment history. Newman Ferrara continues to evaluate potential claims in this area.
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