New York's Court of Appeals—which has the last word on all court cases in the Empire State—has tossed out a 2021 NY Supreme Court ruling that sided with tenants in a rent control case that significantly widened the use of a punitive default rent formula against landlords, forcing them to restore the lowest regulated rent rates in their buildings.

The tenants had accused landlord William Koeppel, owner of a 137-unit East Side apartment building, of "fraudulently" recalculating stabilized rents in 2011 and 2012 while he was collecting J-51 tax abatements on the property.

The Court of Appeals said the earlier ruling—which reduced rents in the affected apartments by 60% and bankrupted Koeppel, who has been unable to collect any rent from a large number of tenants in the past two years—had "misinterpreted" the state's rent control statute in significantly widening the use of the default penalty.