The New York Court of Appeals reversed a lower court decision in *Aras v. B-U Realty Corp.*, clarifying standards for fraud exceptions in rent stabilization cases and providing tenants with a clearer path to challenge potentially fraudulent rent increases.

The court issued its memorandum decision on Feb. 11, ruling that the order should be reversed with costs awarded to the appellants. The case was remanded to the Appellate Division for further proceedings, with the certified question answered in the negative.

The dispute centered on the fraud exception to the four-year lookback period established in Rent Stabilization Law § 26-516(a). This provision typically limits how far back tenants can challenge rent increases, but includes an exception for cases involving fraud.

The appeals court found that the lower court order was issued before the state's highest court clarified the legal standard in *Burrows v. 75-25 153rd St., LLC* (44 NY3d 74 [2025]). That decision established that tenants do not need to demonstrate each element of common-law fraud to invoke the fraud exception.

Instead, the *Burrows* ruling held that plaintiffs must "put forth 'sufficient indicia of fraud' or a 'colorable claim' of a fraudulent scheme." This represents a lower threshold than proving traditional fraud elements such as misrepresentation, intent to deceive, justifiable reliance, and damages.

The Court of Appeals noted that some courts, including the Appellate Division in the instant case, had "improperly impose[d] a requirement that tenants demonstrate all elements of a common-law fraud cause of action to avail themselves of the fraud exception to the lookback rule."

This misapplication of the legal standard appears to have been the basis for the reversal. The court directed that on remand, the proper *Burrows* standard should be applied in determining whether the plaintiffs made a sufficient showing to invoke the fraud exception.

The case involved multiple parties, with Leisa Aras and others serving as appellants, while Catherine Schwartz and additional plaintiffs were also named in the action against B-U Realty Corp. and other respondents.

Damon P. Howard represented the appellants, while Michael Littman appeared for the respondents. The case drew significant attention from housing advocacy groups, with multiple organizations filing amicus curiae briefs including the New York Apartment Association and Housing Rights Initiative, Inc.

The involvement of these housing organizations underscores the broader implications of the decision for landlord-tenant relationships across New York. The fraud exception plays a crucial role in protecting tenants from potentially illegal rent increases that might otherwise be shielded by the four-year lookback limitation.

Under rent stabilization law, tenants typically can only challenge rent increases going back four years. However, the fraud exception allows tenants to reach back further in time if they can demonstrate fraudulent conduct by landlords in setting rents.

The *Burrows* precedent, now reinforced by the *Aras* decision, makes it easier for tenants to meet this threshold by requiring only "sufficient indicia of fraud" rather than proof of all traditional fraud elements. This could include evidence of systematic overcharging, falsified documents, or other deceptive practices in rent-setting.

The decision reflects the Court of Appeals' effort to ensure consistent application of tenant protection laws throughout the state's court system. By clarifying that lower courts had been applying an overly restrictive standard, the high court aimed to provide more uniform protection for tenants facing potentially fraudulent rent practices.

The case also demonstrates the evolving nature of landlord-tenant law in New York, where the Court of Appeals continues to refine the balance between property rights and tenant protections. The *Burrows* decision last year marked a significant shift toward tenant-friendly interpretations of rent stabilization provisions.

For practitioners in landlord-tenant law, the *Aras* decision reinforces the importance of the *Burrows* standard and suggests that courts should take a broader view of what constitutes sufficient evidence of fraud for purposes of the lookback exception.

The remand to the Appellate Division means the case will return to the lower court for reconsideration under the proper legal standard. This could result in a different outcome for the tenants, who may now have a better chance of demonstrating fraud sufficient to extend the lookback period.

The decision was published as New York Slip Opinion 00637 for 2026, though it remains uncorrected and subject to revision before publication in the official reports. The memorandum format indicates the court viewed the legal issues as sufficiently settled by prior precedent to warrant a brief rather than full opinion.

The ruling continues New York's recent trend of strengthening tenant protections through clarification of existing law rather than creating entirely new rights or obligations for either landlords or tenants.