DHCR "EA" Properly Explained Effect of HSTPA on Deregulation Order

In 2018, landlord applied for high-rent/high-income deregulation of tenant's rent-stabilized apartment. In February 2019, the DRA ruled for landlord based on tenants' admission that their total annual household income exceeded $200,000 in both 2016 and 2017. The DRA ruled for landlord but noted in its decision that the unit "is deregulated, effective upon the expiration of the existing lease."

In September 2019, the DHCR sent landlord and tenants an Explanatory Addendum (EA) to point out the effect of HSTPA, which amended the Rent Stabilization Law so that high-rent/high-income deregulation was abolished effective June 14, 2019. The EA stated that if, when the DRA's deregulation order was issued in February 2019, tenants were under a renewal lease that expired after June 14, 2019, they wouldn't be deregulated. Therefore, because tenants' renewal lease expired on June 30, 2019, they couldn't be deregulated.

Landlord appealed the EA, and the DHCR denied its PAR. Landlord then filed an Article 78 court appeal, arguing that the DHCR's decision contained errors of law. The court ruled against landlord. RSL Sections 26-504.1 and 26-504.3 were both repealed by HSTPA. HSTPA provided that any unit lawfully deregulated prior to June 14, 2019, remained deregulated. But, otherwise, the Act became effective immediately. It was no error of law for the DHCR to have concluded that it couldn't authorize the deregulation of tenant's rent-stabilized apartment after HSTPA's June 14, 2019, effective date. The EA didn't present any new DHCR policy. The deregulation order itself stated that deregulation of the apartment wouldn't occur until tenants' current renewal lease expired. This wasn't a retroactive application of the deregulation repeal. Landlord also incorrectly argued that the deregulation order created "an existing legal or property right," because the RSL and RSC make it clear that the deregulation order merely created "a right to prospective relief." Landlord also showed no reason why the DHCR wasn't entitled to issue the EA. 

87th St. Sherry Assoc., LLC v. DHCR: Index No. 153995/2020, 2020 NY Slip Op 34061(U)(Sup. Ct. NY; 12/9/20; Edmead, J)