The state's highest court Thursday ruled that the owners of Stuyvesant Town and Peter Cooper Village in Manhattan improperly charged market rents on thousands of apartments.
The court decision could now affect landlords across the city.
In the 4-2 decision, the court said owners Tishman Speyer Properties and BlackRock Realty illegally raised the rent on regulated apartments in the middle-class enclave.
The court found that rents were hiked above market rates, while the owners collected city affordable housing tax breaks for renovations.
The owners, as well as former owner MetLife, may have to refund about $200 million in overcharges and damages to tenants of approximately 4,000 apartments.
Tishman Speyer and Black Rock Realty bought the complexes in 2006 for $5.4 billion, and they are reportedly in deep financial trouble and in danger of defaulting on a $4 billion loan.