NYC landlords likely to lose challenge of rent freeze, legal experts say – but a win could throw rent-stabilized leases into chaos

Landlords who have sued to reverse the Rent Guidelines Board’s June decision to freeze the rent on nearly 1 million stabilized apartments will probably lose their case against the city seeking to do so, legal experts say, regardless of whether or not they personally agree with or think the landlords’ case is strong.

But should those landlords win their case and the rent freeze is overturned, those same legal experts say they have no idea what will happen to the leases people have signed over the past few months with start dates in and past October. Renewal of leases that people are set to sign this fall would also be thrown into an unprecedented and unclear period of chaos.

How strong is the landlord’s case and who’s likely to win?

Those suing want Manhattan Supreme Court Judge Brendan Lantry to rule the decision was arbitrary and capricious – or ran afoul of proper legal process – and to order the RGB to redo its analysis, a process that could theoretically end with the board coming back to the same determination of freezing the rent.

The nine members, six of whom were appointed by Mamdani, didn’t properly consider the evidence in front of them and ignored or failed to properly weigh evidence showing landlords are struggling and need to raise the rent to stay afloat, the landlords allege via their lawyer Randy Mastro, the former first deputy mayor under Eric Adams.

But New York Law School professor Andrew Scherer and Legal Aid attorney Ellen Davidson told amNewYork that they believe the argument is both weak and false.

“I don’t think it’s a strong claim at all. I’m pretty sure that the landlords are going to lose,” said Scherer, who serves as the director of the law school’s Housing Rights Clinic. “The standard to overturn something like this is really pretty high, and there’s a very long tradition of the courts deferring to decisions made by administrative agencies or executive branch officials.”

To come out on top, all the city needs to do is prove that there was a rational basis in the record for the RGB’s decision – not that freezing the rent was the only rational decision, just that the board properly considered the information in front of it and freezing the rent was a logical, evidence-based conclusion from that effort. In a court hearing on the case last week, city attorneys argued that’s exactly what happened.

“It’s a real long shot for the landlords because … [The RGB] looked at lots of documentation and data, and they made a decision,” Scherer said. “You never know what exactly goes on inside of people’s heads, but they deliberated, they had discussions, they had a lot of back and forth on both sides of the issue, and then they ultimately made a decision. These landlords don’t like it, but, you know, so it goes.”

Davidson agreed, saying she thought the case would be “fairly simple” for the judge to decide in favor of the city.

“I do not think that this is a strong case against the Run Guidelines Board,” Davidson said. “The government agencies, government boards, make decisions all the time, and people challenge them because they don’t like the result of the decision. But the law is clear that the court’s only job is to see whether there is support for the board’s position in the record, and there was.”

Paul Kremer, an attorney at business-side firm Benesch Law, said that while he thought the case could go either way, if he was a betting man, he’d put money on the city winning. Kremer cited the high barrier necessary to overturn an agency decision like this and told amNewYork that, while he may agree the landlords have a good argument, there probably is sufficient evidence in the record to show the board made a rational decision.

The landlord’s other argument, that the rent freeze was predetermined or influenced by Mamdani, is essentially irrelevant, said Scherer, Davidson and other legal experts with a more sympathetic view of the landlords’ case. That’s because even if a court did think the RGB’s decision was predetermined or had been influenced by the mayor, as long as it also believed there was a rational basis for it in the record, it doesn’t really matter legally.

Davidson, who said she’s testified in front of the RGB for decades, told amNewYork it’s certainly felt like the board was operating on a predetermined decision to raise the rent in past years. But, Legal Aid never brought a lawsuit, because the decision feeling predetermined didn’t necessarily mean there wasn’t also a rational basis in the record to raise the rent, and it’s in the board’s purview to do what it believes is correct.

“During the Bloomberg years, the chair of the board made it clear that he thought his job was to increase rents,” Davidson said. “It was pretty clear in those years that it was predetermined that no matter what was in front of the board about how landlords and tenants were doing, they were going to do everything possible to increase rents. We did not sue them, because the law is pretty clear that boards get to make their own decisions.”

Scott Loffredo, a partner at real estate firm Belkin Burden Goldman – which typically represents landlords and property owners – said even though he thinks the landlords have brought an “incredibly strong” and “legally sound suit,” he also thought the argument that the rent freeze was predetermined is an unconvincing part of the landlords’ case, partially because it makes the case feel politically motivated.

“I think there’s strong evidence presented in the record that a rent freeze was not a proper or evidence-based conclusion,” Loffredo said. “I don’t believe it’s in the petitioner’s best interest to argue that this was a predetermined outcome, because when you make such an argument, the field of play that you’re creating is now a political one over a legal one … To start the argument from a position of political accusation, I feel, would hinder an otherwise fundamentally very strong legal record.”

Though Loffredo said he agrees with the landlords suing and thinks there is evidence to show that the board acted out of bounds, that doesn’t mean he necessarily thinks it’s likely that they’ll win the case.

“Every ounce of me objectively believes that the lawsuit is 100% correct and sound,” Loffredo said. “That being said, it’s a very uphill legal battle to convince a court that the RGB was arbitrary and capricious.

What happens if the landlords win?

“It would create chaos. Absolute chaos,” Davidson said. “This has never been an issue that any court has encountered, so we can’t look at how it has been handled in past circumstances. This would be unprecedented.”

That’s a sentiment shared by all the lawyers amNewYork talked to, who said all of their legal analysis over what would happen to the rent-stabilized leases in question was purely speculation and they truly had no idea what was most likely to happen to them.

All generally thought that leases that have been signed before Oct. 1 with start dates in and after October with 0% increases would stay that way, no matter what. Attorneys also thought it was unlikely there’d be any retroactive rent increase, meaning that if the RGB was ordered to redo its determination process and decided there should be a 2% increase on leases, for example, people likely wouldn’t be ordered to pay back rent on what they would’ve owed if their rent had been 2% higher the whole time the lease had been in effect.

But Davidson said the moment there’s an order saying the rent freeze was invalid, landlords might argue that means the law underlying the leases – and therefore the leases themselves – people signed were also invalid, meaning there could be retroactive or immediate prospective changes to already signed leases. She also said the interim between a hypothetical decision in the landlord’s favor and a new decision from the RGB could leave a monthslong period where landlords could hike up the rent as much as they wanted to with no ceiling.

Kremer held a similar position, saying the rent freeze would likely remain in place for all leases signed before Oct. 1, but that the period between a judge ruling in favor of the landlords and a new decision from the RGB would likely give landlords a period where they could raise the rent as much as they want.

“If the court reverses the agency decision and remands to the RGB, it will most likely do so by saying this decision is vacated and the agency must issue a new decision,” Kremer said. “Whether there’s a number [for rent increases] that exists during that period is an interesting question. I would think that there’s no number at that point.”

The landlords bringing the case said in court last week that they think all the leases already signed before Oct. 1 would not be affected if they won. For the interim, where the RGB would be “redoing” their decision-making process, they’d want the rent increases the RGB set for the 2025-26 year – 3% for one-year leases and 4.5% for two-year leases – to stand in place for leases signed in that period until the board finished its process of setting new rent increases.

Loffredo also said he thought a ruling in favor of the landlords would keep the rent frozen for all already signed leases and all leases signed during the RGB’s process of redoing their decision. But different from Scherer, he said he believes any new increase the RGB decides on would prospectively impact all already signed leases, meaning that a person who had already signed and was paying rent on a lease with a 0% increase may then have to start paying more rent going forward on an already executed lease.

Loffredo said he thought how messy a ruling in favor of the landlords may be may factor into the judge’s decision to rule in favor of the city.

“How chaotic the result [in favor of the landlords] would be would likely weigh into that [decision],” Loffredo said. “A fact finder would ultimately have to know that their decision is going to create new hearings and new rent increases and would impact already signed leases and weigh that.”

The judge on the case is expected to make a decision in the coming days. If he rules in favor of the landlords, the city is expected to appeal the decision to the Appellate Division, First Department – an action that would likely, but not certainly, grant the city a stay that would prevent the judge’s order overturning the freeze from going into effect until the appellate court rules on the case.

Question on rent control: I understand that landlords pull their properties off the rental market when rents are frozen. But how is earning zero dollars preferable to earning less dollars? Taxes and insurance are still going to rise. How are they paying for that with no rental income?

The logical, evidence-based conclusion is that rent control is grotesquely stupid and counterproductive in the long run. But for a New York judge to step out of fantasy and rejoin the reality based community is probably a bridge too far.

Rent control makes no sense at all. Why would any property owner hold rentals in any rent-controlled area?
But this is NYC. And, now they have a commie muzzie mayor...

According to experts, government edicts get the desired results. Freedom, on the other hand, leads to chaos.

By the way, why are people supposed to follow the law? Illegal immigrants don’t.

“Question on rent control: I understand that landlords pull their properties off the rental market when rents are frozen. But how is earning zero dollars preferable to earning less dollars? Taxes and insurance are still going to rise. How are they paying for that with no rental income?”

Maybe it’s the principle of the deal - they are losing money as it is - because they have discovered that their property isn’t really theirs - they’re just leasing it from a overbearing government. The concept of property ownership has died.

Others with more knowledge of real estate may correct my assumptions but I’ll suggest these possibilities.

1. It might be better to take the loss from no income at all, and take a write off against profits made elsewhere, than to lose money from a rent freeze PLUS tenant legal actions pushed by a socialist administration.

2. Redevelop the building for another purpose. Depending on zoning that might be condos or commercial use. In New York apartments are sold as well as rented.

At some point these landlords will decide they can no longer afford to PERSONSLLY subsidize these properties. The money is flowing out of their own pockets.

The next move may be to stop paying taxes and let the city seize their property. Would not the city then have to compensate them for the fair market value less taxes owed?

The Takings Clause lawsuits will be delicious to watch when the city claims the property values are less than the value used to determine tax and rent control.

8 posted on 09/12/2026 6:08:26 AM PDT by Ex-Con777 ("Journalism is about covering important stories-with a pillow, until they stop moving." ~ David Burg)

The left loves the “rich” paying their fair share. I suggest means-testing to qualify for rent controlled and rent stabilized apartment, among other income based benefits, like food stamps.

Ed Koch, David Dinkins and Zohran Mamdani had rent controlled apartments. In fact, if I recall correctly, the first two kept theirs while living in Gracie Mansion....

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.