Rent Act of 2015 Didn't Preclude Vacancy Deregulation of Tenant's Apartment

LVT Number: #32263

Landlord applied in 2016 for high-rent/high-income deregulation of tenant's rent-stabilized apartment, claiming that the legal regulated rent (LRR) was $2,700 per month and requesting verification of whether tenant's household income was more than $200,000 annually in 2014 and 2015. The DRA dismissed landlord's application in 2017, finding that because a vacancy occurred in 2015 and the LRR was then $2,500 per month, the apartment had been vacancy deregulated and was no longer subject to a DHCR determination.

Landlord applied in 2016 for high-rent/high-income deregulation of tenant's rent-stabilized apartment, claiming that the legal regulated rent (LRR) was $2,700 per month and requesting verification of whether tenant's household income was more than $200,000 annually in 2014 and 2015. The DRA dismissed landlord's application in 2017, finding that because a vacancy occurred in 2015 and the LRR was then $2,500 per month, the apartment had been vacancy deregulated and was no longer subject to a DHCR determination. On June 3, 2019, the DHCR reopened the case and sent it back to the DRA. The DHCR found that, based on passage of the Rent Act of 2015, landlord's 2016 application was improperly terminated because the unit remained rent stabilized. Then, in February 2020, the DRA ruled that, because the HSTPA had repealed high-rent deregulation effective June 14, 2019, the case must be dismissed.

Landlord appealed and won. The DHCR noted that an appeals court in the case of 326 Starr, LLC v. Martinez, 74 Misc.3d 77 (App. T. 2 Dept. 2021) had ruled that the language of former RSL Section 26-504.2(a) excluded from regulation any unit with a LRR that was $2,700 or more per month at any time on or after the effective date of the Rent Act of 2015. So, the 2015 RSL provision permitted removal of apartments from regulation without reference to the rent at the time of the vacancy and would include any available post-vacancy statutory increases. Therefore, based on the 326 Starr decision, tenant's apartment in this proceeding was deregulated under high-rent vacancy deregulation on July 27, 2015, because the LRR at that point exceeded the deregulation threshold of $2,700 per month. It didn't matter that landlord gave tenant a rent-stabilized lease and registered the apartment as rent stabilized, since the rent level surpassed the deregulation threshold.

The DHCR reinstated the DRA's original order in this case. The DHCR also revoked its prior ruling concerning HSTPA, since it didn't apply to this matter.

80th Realty LLC: DHCR Adm. Rev. Docket No. IO410021RO (9/26/22)[4-pg. document]

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