Apartment in Building That Had Received J-51 Not Subject to Deregulation

Landlord applied for high-rent/high-income deregulation of rent-stabilized apartment in 2013. Landlord claimed that tenant’s rent was $2,500 or more. The DRA ruled against landlord because the building had received J-51 tax benefits and tenant’s lease didn’t contain the required J-51 notice provisions for the automatic deregulation of the apartment upon expiration of the J-51 benefits. The apartment therefore remained rent stabilized until tenant moved out.

Landlord appealed and lost. Landlord pointed out that the building’s J-51 benefits had expired before landlord sought high-rent/high-income deregulation. But the apartment wouldn’t have been rent stabilized at the time the J-51 benefits expired but for the receipt of the J-51 benefits. So the luxury deregulation provisions of the rent stabilization law were not and are not applicable to the apartment after the expiration of the J-51 benefits. The DRA properly denied landlord’s application because the apartment wasn’t eligible for high-rent/high-income deregulation. Tenant had moved into the apartment when the legal rent exceeded $2,000, while J-51 benefits were being received and so would have become luxury vacancy decontrolled and no longer subject to rent stabilization were it not for the receipt of J-51 tax benefits at that time.

400 E58 Owner LLC: DHCR Adm. Rev. Docket No. DR410051RO (12/3/15) [8-pg. doc.]