Litigation Byte

Court Enjoins Landlord from Reporting Withheld Rent Payments to Credit Reporting Agencies

March 27, 2025

On March 11, 2025, the New York County Civil Court issued an injunction under the New York Fair Credit Reporting Act (NYFCRA) barring a landlord from reporting to the credit reporting agencies (CRAs) the withheld rent payments, notwithstanding the court’s lack of jurisdiction to award injunctive relief. After distinguishing the NYFCRA from the Fair Credit Reporting Act (FCRA), the court concluded that it had equitable authority to fashion the appropriate remedy to promote the strong public interests where tenants withheld rent due to the alleged breach of the warranty of habitability.

In Sage, the landlord brought a non-payment eviction proceeding to recover unpaid rents. The tenants answered, asserting counterclaims for breach of the warranty of habitability and harassment, and a trial was scheduled. Subsequently, tenants moved to enjoin the landlord from reporting unpaid rent to the CRAs pending the outcome of the trial.

Initially, the court agreed with the landlord that the FCRA does not authorize injunctive relief requested by tenants. Nonetheless, it concluded that “the lack of an injunctive remedy according to the FCRA does not preclude injunctive relief according to the [NYFCRA].” Particularly, the Sage court reasoned that “while the NYFCRA expressly authorizes monetary damages, the absence of any mention of injunctive relief or an affirmative grant of power to seek injunctive relief does not necessarily and inescapably lead to the conclusion that the Legislature meant to preclude such relief for private plaintiffs[, and thus, t]he FCRA does not pre-empt state law … that would permit an injunction against a credit-reporting agency.”

Moreover, and while the court conceded that it lacks subject matter jurisdiction to issue injunctions, it noted that New York City Civil Court Act § 110(c) authorizes a court to “employ any remedy … procedure or sanction authorized by law for the enforcement of housing standards, if it believes they will be more effective to accomplish compliance or to protect and promote the public interest ….”

The Sage court determined that credit reporting of withheld rent would be impermissible on public policy grounds. If permitted, such conduct would certainly deter the tenants’ ability to exercise their lawful remedies for the landlord’s alleged breach of the warranty of habitability. Besides, the injunction would be merely provisional and the landlord failed to show that it would suffer any prejudice if injunctive relief is granted. Hence, the court enjoined the landlord from reporting withheld rents “through a disposition of this matter after trial.”

Sage shows that New York courts are unlikely to restrict their own authority when consumer’s rights are supported by established public policy interests, even if the requested relief lacks statutory basis.