Rent Act of 2015 Didn't Preclude Vacancy Deregulation of Tenant's Apartment

Tenant complained to the DHCR of rent overcharge in 2017. She had moved into the apartment in August 2016 at an initial rent of $2,850. Landlord claimed that the apartment was vacancy deregulated when tenant moved in. The DRA ruled for tenant and held that, pursuant to the Rent Act of 2015, the apartment couldn't have been vacancy deregulated because the last rent paid by the immediately prior tenant was less than the $2,700 vacancy deregulation threshold in effect at that time. The DRA froze tenant's rent at $2,850 due to landlord's failure to file annual apartment registrations since tenant moved in, and directed landlord to base future rent increase on the amount of $2,850.

Landlord appealed and won. Landlord pointed out that the DRA's decision was in conflict with an appeals court decision in the case of 326 Starr LLC v. Martinez, 74 Misc.3d 77 (App. Term 2 Dept. 2021). The DHCR agreed and revoked the DRA's ruling. In 326 Starr, the court ruled that former RSL Section 26-504.2(a) excluded from regulation any housing accommodation with a legal regulated rent that was $2,700.00 or more per month at any time on or after the effective date of the Rent Act of 2015, and which became vacant after the effective date of the Rent Act of 2015. The court held that this section of the RSL permitted removal of apartments from rent regulation without reference to the rent at the time of the vacancy. Therefore, the threshold for deregulation in this case was met since the legal rent, including legal post-vacancy statutory increases, exceeded the deregulation threshold.  [Download PDF of decision]

Nathan Goldstein Inc.: DHCR Adm. Rev. Docket No. KM210010RO (11/3/22)[2-pg. document]