As reported earlier today by Law360’s Isaac Monterose, a proposed class action filed in New York state court accuses a major multifamily real estate company and a property owner of unlawfully raising rents on Long Island City tenants by exploiting the state’s 421-a tax exemption program.
The suit, brought by tenants of 29-22 Northern Boulevard, alleges that The Dermot Co. LP and QSB Northern LLC failed to comply with rent stabilization requirements tied to the tax benefit, which mandates registration with the Division of Housing and Community Renewal and adherence to rent guidelines.
According to the complaint, the defendants sidestepped legal rent limits by offering tenants rent concessions—such as one month free—while registering higher legal rents with the state. These concessions, the plaintiffs argue, are essentially preferential rents disguised as discounts, violating the Housing Stability and Tenant Protection Act. The lawsuit claims that by consolidating the discount into one or more months, the landlords created a misleading rent structure that allowed them to raise renewal rents beyond what the Rent Guidelines Board permits.
The suit also details specific instances of alleged misconduct. One named plaintiff, Timothy Mui, was charged $3,832 in monthly rent when he should have paid $3,649. His 13-month lease included a final month at $3,955, and upon renewal, his rent increased to $4,064—an effective 6% hike, well above the 2.75% cap. Another plaintiff, Hien T. Nguyen, was promised six weeks of free rent and amenities like free Wi-Fi, which were rescinded upon renewal. The plaintiffs argue that such changes violate rent stabilization rules that prohibit altering the terms and conditions of tenancy at renewal.
The proposed class seeks to represent tenants who lived in the building from August 27, 2019, onward, including a subclass of current residents. The case stems from an investigation by the nonprofit Housing Rights Initiative, which has reportedly uncovered similar schemes across multiple properties. Michael Shank, HRI’s Organizing Director, stated that the persistence of these violations reflects a failure of enforcement by the Division of Housing and Community Renewal, saying, “Until the Division…chooses to commit sufficient resources to the proactive enforcement of rent-stabilization law, it must, unfortunately, continue to fall to nonprofits like ours to step in and fill the void.”
Class counsel Lucas A. Ferrara of Newman Ferrara LLP emphasized the broader implications of the case, noting, “This kind of misconduct isn’t a rare misstep — it’s become a business model.” He criticized the erosion of accountability in a program designed to promote affordability, arguing that landlords have turned compliance into a suggestion and exploitation into routine.
The case, Timothy Mui et al. v. QSB Northern LLC et al., is pending before the Supreme Court of New York, County of New York, under case number 161469/2025.
The proposed class is represented by Lucas A. Ferrara and Roger A. Sachar Jr. of Newman Ferrara LLP.
You can find the original article on Law360’s website (subscription required).
A copy of the complaint can be found by clicking here: Timothy Mui et al. v. QSB Northern LLC et al