Housing · Rent stabilization
Rent Overcharge Fraud After Burrows: Why Tenants Are Stronger Together
New York’s highest court made it easier for tenants to get past the four-year limit on overcharge claims. The cases that benefit most involve a whole building, not one apartment.
If you live in a rent-stabilized building and suspect your rent was set illegally years ago, you have probably heard that it is too late to do anything about it. For many tenants that is wrong. In March 2025 the New York Court of Appeals decided Burrows v 75-25 153rd St., LLC, 44 N.Y.3d 74 (2025) and removed one of the main obstacles landlords had been using to defeat old overcharge claims. The Legislature had already moved in the same direction. Together, these changes matter most to groups of tenants in the same building.
The four-year wall
For overcharges that happened before the 2019 rent law reforms, courts generally look back only four years from the date the tenant files. The 2019 law lengthened that period to six years, but courts have held the longer period does not reach earlier overcharges (Abdelrazek v 12-15 Broadway Astoria, LLC, 249 A.D.3d 1124 (2d Dep’t 2026), at 1125–26). So if your building’s first registered rents were set a decade ago, the owner’s first argument will be that the rent history you need is off-limits.
There is an exception for fraud. When tenants show evidence that the owner used a scheme to get around rent stabilization, a court will look at the older rent history to decide whether fraud occurred (Burrows, 44 N.Y.3d at 80–83). If it did, the legal rent is recalculated using a “default formula” instead of the tainted numbers (Abdelrazek, 249 A.D.3d at 1126).
What Burrows decided
The tenants in Burrows lived in a Queens building that received 421-a tax benefits. They alleged that the prior owner registered two numbers as each apartment’s first rent, a lower “preferential” rent that tenants actually paid and a higher “legal” rent, and then used the higher number to take larger increases than the law allowed. The scheme, they alleged, ran for years and affected hundreds of tenants (44 N.Y.3d at 79).
The lower appeals court threw the case out. It reasoned that because both numbers were visible in the public registrations and in the leases, no tenant could have been fooled, so there was no fraud.
The Court of Appeals unanimously rejected that reasoning. A tenant does not have to show that he or she relied on the owner’s false statement for the fraud exception to apply (44 N.Y.3d at 80, 84). The exception protects “not only current tenants, who may or may not have relied on a fraudulent representation, but future tenants and the overall rent regulatory system” (id. at 83). What tenants must show is “sufficient indicia of fraud” or a “colorable claim” of a fraudulent scheme (id. at 83–84).
When the case went back down, the First Department let the claims go forward. It said that an owner who registers “an arbitrary and fictitious first rent that was not actually charged and paid as the legal regulated rent, in order to avail itself of excessive rent increases, would constitute a fraud against the regulatory system itself if established” (Burrows v 75-25 153rd St., LLC, 244 A.D.3d 408 (1st Dep’t 2025), at 409–10). Those are allegations, not findings. The tenants still have to prove them.
The Legislature’s standard
In late 2023 and again in 2024, the Legislature amended the rent laws to say that a court need not find “all of the elements of common law fraud” to decide that a fraudulent scheme to deregulate occurred “if the totality of the circumstances nonetheless indicate” one (L 2024, ch 95, § 4, quoted in Burrows, 44 N.Y.3d at 84 n). The appellate courts have held that this standard applies to cases that were pending on December 22, 2023 and to later ones, and that it allows review of an apartment’s full rent history to decide whether a deregulation was lawful (Alekna v 207-217 W. 110 Portfolio Owner LLC, 241 A.D.3d 414 (1st Dep’t 2025), at 415–17; Gomes v Vermyck, LLC, 238 A.D.3d 26 (2d Dep’t 2025), at 39–45). The question is whether the owner “knowingly engaged” in a scheme, judged by everything that happened.
What a building can recover
Under the current rent stabilization law, an owner found to have overcharged owes the overcharge, and three times the overcharge unless the owner proves the overcharge was not willful (N.Y.C. Admin. Code § 26-516(a)). Recovery reaches back six years before the complaint, and the tripling applies to willful overcharges in that period (§ 26-516(a)(2)). The owner must also pay “the reasonable costs and attorney’s fees of the proceeding,” plus interest (§ 26-516(a)(4)). That last provision matters: an owner who loses pays the tenants’ lawyers too. The six-year rules came with the 2019 reforms; for overcharges before then, the older four-year limit still applies (Abdelrazek, 249 A.D.3d at 1125–26).
Why this is a building question
A scheme is a pattern. One high rent increase proves very little; the Court of Appeals said plainly that “a mere allegation of a high rent increase is insufficient” (44 N.Y.3d at 84). What shows a scheme is the same thing happening across many apartments: the same inflated first rents, the same pattern of deregulations, the same gap between registered and collected rents. That evidence sits in the rent histories of many units at once, and one tenant usually sees only his or her own.
New York law lets tenants bring these claims together. In Borden v 400 E. 55th St. Assoc., L.P., 24 N.Y.3d 382 (2014), the Court of Appeals allowed tenants to pursue rent overcharges as a class action, so long as they sought only the overcharges themselves and gave up the claim for triple damages (id. at 389–90, 397–98). The central question in such a case, whether the apartments were unlawfully deregulated, is common to everyone, even though each tenant’s damages differ (id. at 399). Courts continue to certify tenant classes on that basis, including a 2026 Second Department decision involving a building where the owner allegedly registered the wrong first rents in 2013 and 2014 (Abdelrazek, 249 A.D.3d at 1124, 1127–28). Tenants may also bring these cases in court rather than at the state housing agency (id. at 1128).
Two limits are worth knowing. Courts decide the question apartment by apartment, so the evidence has to reach each unit (Gomes, 238 A.D.3d at 45). And an owner’s honest mistake about the law is not a scheme (id. at 48), although willful ignorance of the law may point to one, especially when the owner is a sophisticated one (id. at 51).
Signs your building may have a problem
- The building receives or received 421-a or J-51 tax benefits.
- The first registered “legal” rents were far higher than the rents anyone actually paid.
- Many apartments were registered with preferential rents from the start.
- Apartments were taken out of rent stabilization and later put back.
- Neighbors in similar apartments pay very different rents with no clear reason.
What to do
Start with the paperwork. Each tenant can request the apartment’s rent registration history from the state Division of Housing and Community Renewal. Collect histories from as many apartments as you can, along with your leases and any riders about preferential rents. A tenant association, or even a handful of neighbors, can put together in a few weeks a picture no single tenant could.
Then have the whole set reviewed. The questions that decide these cases are whether the pattern amounts to a scheme, how far back the evidence reaches, whether a class action or a joint lawsuit fits the building, and whether giving up triple damages to proceed as a class is the right trade. Those are building-wide decisions, and they are best made before anyone files alone.
I represent tenant associations and groups of tenants in rent overcharge and deregulation cases. If your building shows the signs above, get in touch.
This article is general information about New York law, not legal advice, and it does not create an attorney-client relationship. Burrows is a pending case; the facts described are the tenants’ allegations as the courts recited them. Attorney Advertising. Prior results do not guarantee a similar outcome.