January 2024 Insights
By Eileen O’Toole, Esq., Contributing Editor
On Dec. 22, 2023, Governor Hochul signed into law approved legislative amendments to the Rent Stabilization Law, ETPA, and rent control laws passed by the Legislature under State Senate Bill S. 2980-C. Among other things, the amended laws address newly created apartments, substantial rehabilitation, penalties for failure to register rent-stabilized apartments with the DHCR, and standards for determining whether owners have engaged in a fraudulent scheme to deregulate apartments.
The governor’s sign-off, however, included a proviso in the form of a Memorandum (LVT #33048) that the Legislature issue “Chapter Amendments” in the near future to modify certain provisions. At press time, the Legislature had introduced the Chapter Amendments in Assembly Bill 8506 dated Jan. 4, 2024, although no bill has yet been passed. In addition, on Dec. 22, the governor vetoed Assembly Bill A4047B, a so-called “Regina repealer bill,” that the Legislature also had submitted for approval last year.
Locally, the NY City Council added provisions to the Administrative Code that will become effective later this year, to permit tenant complaints about unoccupied apartments with the potential for hazardous or immediately hazardous violations. Local Law 1 of 2024 (LVT #33047) will require HPD to notify owners of such complaints, schedule inspections within 21 days, and issue violations if warranted.
DHCR processing delays were a sore subject in 225 Central Park North LLC v. DHCR (LVT #33018), where the DHCR’s Rent Administrator had dismissed an owner’s 2016 high-rent/high-income deregulation application more than three years later—in November 2019—citing HSTPA’s termination of high-rent deregulation in June 2019. In an Article 78 proceeding for review of the DHCR’s decision, the owner pointed out that the Rent Stabilization Law in effect when its deregulation application was filed required the DHCR to process the case within months. The court found that the agency “negligently” failed to issue a decision before HSTPA was enacted and blatantly ignored statutory deadlines. The court sent the case back to the DHCR for a decision on the merits under the law in effect in 2016.
HPD’s CONH Pilot Program Building List was the subject in two similar cases where a New York County court reviewed owners’ Article 78 appeals of HPD’s addition of their buildings to the list. The list is based largely on HPD findings of significant distress based on application of a Building Qualification Index. While finding that HPD’s rulings were reasonable and supported by the record, the court admonished HPD to be more transparent in its administration of the program, provide more information and explanations for its decisions, and implement a more user-friendly process. See DS Brooklyn Portfolio Owner LLC v. HPD (LVT #33050), GPG 592 LLC v. HPD (LVT #33051).
Occupancy of basement apartments continues to raise questions concerning whether claimed illegality is a viable ground for eviction. In BRX Grounds 1 LLC v. Tejeras (LVT #33025), where an owner sought to evict the tenant of an “illegal” basement apartment, a Bronx Housing Court dismissed the petition. Both sides admitted that there was an HPD violation requiring the owner to legalize an alteration, but it was unclear what unit the violation referred to. The court also noted that any illegal occupancy here was caused by the prior owner with no wrongdoing on tenant’s part.
Similarly, in 35-09 LLC v. Navedo-Perez (LVT #33024), the owner sued in Queens Housing Court to evict a rent-stabilized tenant, claiming occupancy of the tenant’s basement apartment was unlawful. The owner relied on advice of an architect who claimed that DOB wouldn’t approve the unit. But no violation had been issued and the owner didn’t show that it had sought legalization of the apartment from DOB.