DHCR Must Verify Tenant's Income

Facts: In 1995 landlord sent tenant an income certification form. Tenant filled out the form, stating that his annual income for each of the prior two years was less than $250,000, and returned it to landlord. Landlord then filed a petition with the DHCR seeking high-rent/high-income deregulation of tenant's apartment. Tenant answered the deregulation petition and sent it to the DRA by regular mail in an envelope metered on Oct. 16 but postmarked Oct. 23. It got to the DRA three days after the 60-day statutory deadline for answering. The DRA ruled for landlord because tenant's answer wasn't submitted on time. Tenant appealed. The DHCR ruled against tenant. Tenant appealed to the court, claiming that the DHCR's ruling was arbitrary and capricious. Court: Tenant wins. The rent stabilization law requires the DHCR to verify tenant's income for the past two years, regardless of whether tenant answers the deregulation petition, before it can issue a deregulation order. In addition, landlord had filed a prior petition in 1994. Tenant had responded, and the DHCR's records for the 1994 case contained income verification information for 1992 and 1993. That information showed that tenant's income was below $250,000 in 1993, which was also a relevant year for the 1995 application. So the DHCR had information in its own records by which it could have determined that tenant's apartment wasn't subject to deregulation. The DHCR also acted arbitrarily by letting landlord reply to tenant's late answer to the deregulation petition. This was contrary to the DHCR's own procedures. The case was sent back to the DHCR for further processing consistent with the court's decision.

Shapiro v. DHCR: NYLJ, p. 28, col. 4 (4/8/98) (Sup. Ct. NY; Tolub, J)