Apartment Resumed Rent-Stabilized Status After Temporary Exemption

Landlord asked the DHCR to determine the status of tenant's apartment. After an extended period of temporary exemption while the apartment was owned and operated by a not-for-profit hospital that used the unit for employee occupancy, the building was sold and new landlord set the rent above the vacancy deregulation threshold.

The DRA ruled against landlord, who appealed and lost. The apartment was temporarily exempt between 1982 and 2004 while the building was owned and operated by the hospital and used for employee housing. Until January 2014, the Rent Stabilization Code (RSC) permitted owners to set a "first rent" and thereby deregulate an apartment if, after vacancy or temporary exemption, the agreed-upon rent exceeded the vacancy deregulation threshold. But RSC Section 2526.1(a)(3)(iii) was amended in January 2014 to provide that the new rent following extended vacancy or temporary exemption must be determined by "bridging the gap" between the last prior rent-stabilized rent and the rent set after temporary exemption ended. And although tenant's rent was set in 2004, the current RSC provision must apply to the case being decided after that provision went into effect. So tenant was rent stabilized. Since tenant's overcharge claim had already been raised in a housing court proceeding, the DHCR should leave the determination of how much overcharge there was to the court.

AEJ 534 East 88th LLC/Hayes: DHCR Adm. Rev. Docket Nos. FT410046RO, FT410019RT (6/27/18) [12-pg. doc.]