December Insights
By Eileen O’Toole, Esq., Contributing Editor
As 2022 winds down, several recent court and DHCR decisions highlight points of contention that have surfaced in landlord-tenant law throughout the year.
Upstate, in HYH Newburgh, LLC v. The City of Newburgh (LVT #32371), an Orange County court has stricken the City of Newburgh’s good cause eviction law. As with the Albany County court’s earlier decision this year (see Pulsatere v. City of Albany, LVT #32159), the Newburgh court found the city’s Local Law 6 to be invalid since it was in direct conflict with various provisions found in the state’s Real Property Law and Real Property Actions and Proceedings Law.
Also upstate, a group of owners of buildings now subject to rent stabilization under the City of Kingston’s August 2022 adoption of the ETPA filed a challenge to the city’s actions, arguing that the vacancy study upon which the ETPA adoption was based is flawed. In Hudson Valley Property Owners Association Inc. v. The City of Kingston New York (LVT #32372), the owners have obtained injunctions against the city, the local Rent Guidelines Board, and the DHCR to prevent enforcement of recent RGB orders that would have reduced current rents and to stay processing of fair market rent appeals or leasing complaints while the owners’ case is pending.
Statewide, it is now anticipated that the Office of Temporary and Disability Assistance (OTDA) will shut down the Emergency Rental Assistance Program (ERAP) on Jan. 15, 2023. The likelihood of continued financing of the program beyond that date seems slim. Those who have already submitted applications, or plan on submitting applications before Jan. 15, won’t be precluded from the eviction protections set forth by the ERAP statute.
Meanwhile, owners successfully sought relief from ERAP stays in two recent cases. In Sealy v. Bror (LVT #32375), a Mt. Vernon court vacated an ERAP stay where the tenant had not recently been living in the subject apartment. And in Shemiran Co. DE LLC v. Rosenberg (LVT #32377), a New York housing court vacated an ERAP stay because a prior application by the apartment’s co-tenant had already been filed and rejected.
On the rent regulation front, the DHCR has again cited appellate case law and ruled in Matter of Nathan Goldstein, Inc. (LVT #32370) that the Rent Act of 2015 did not preclude vacancy deregulation (while such deregulation was still in effect) where the prior tenant’s last rent-stabilized rent was below the deregulation threshold. Again, this is a reversal of DHCR’s original position on this question.
Some recent rulings by the DHCR upheld reduced MCI rent increases that were substantially lower than anticipated since the MCI applications in question were filed, but not yet decided, prior to enactment of HSTPA. Citing recent appellate case law, the DHCR reiterated prior rulings that no MCI increase would be granted where 35 percent or fewer of a building’s housing accommodations were rent regulated. See Matter of EGA Holdings LLC (LVT #32354). In Matter of 386 Fort Washington Realty LLC (LVT #32360), the DHCR upheld HSTPA MCI provision amendments applied to a pending application that resulted in extension of the amortization period for the total MCI increase, elimination of any retroactive MCI increase, and reduction in the amount of the collectible increase from 6 percent to 2 percent of the rents set forth in the pre-HSTPA application.
The DHCR also reiterated that no MCI increase would be awarded for “group work,” such as building-wide bathroom or kitchen replacements, where an MCI application for this previously reimbursable improvement cost was filed prior to June 14, 2019, but not decided until after HSTPA enactment when the amended laws no longer permitted any MCI rent increase for this work. See Matter of 667 East 232 LLC (LVT #32351).
In 300 Wadsworth LLC v. DHCR (LVT #32373), an appeals court upheld the DHCR’s rejection of an owner’s challenge to HSTPA amendments that substantially limited rent increases for individual apartment improvements (IAIs). The owner had spent substantially more than $15,000 on IAIs started shortly before HSTPA’s enactment in 2019. The appeals court found that the owner lacked vested rights in the pre-HSTPA rent laws governing IAIs and denied the owner’s claim that the amended HSTPA was unconstitutional.
Finally, at this writing, the DHCR has not yet published anticipated amendments to the Rent Stabilization Code mandated by HSTPA and proposed by the DHCR several months ago. However, effective Nov. 21, 2022, Chapter 619 of the Laws of the State of New York of 2022 now prohibits owners of rent-stabilized and rent-controlled apartments in “electrical exclusion” buildings from the continued collection and the prospective imposition of previously permitted rent surcharges for the use of a tenant-installed air conditioning unit.