One of the chief differences between the Loft Law and rent stabilization is that the former allows tenants to “sell” their rent regulation rights to the landlord. Multiple Dwelling Law §286(12) . While this can sometimes result in a substantial cash payment to the outgoing tenant, it is not good for a subsequent residential tenant. If the building has fewer than six residential units, the landlord may re-rent the unit at market rate and the new tenant is not protected by the Loft Law. [The rule may be different for buildings with six or more units – the subject of a future blog post.]
In Matter of Lewis, OATH Index No. 2489 (Nov. 7, 2018), the landlord defended the tenants’ rent overcharge claim by alleging that it had previously bought the former tenants’ rights for $10! David convinced the OATH judge that the sale was a sham, allowing her to recommend that the Loft Board to lower the tenants’ rent and award them substantial overcharges.