Tenant of Improperly Deregulated Apartment Entitled to Rent-Stabilized Renewal Lease

Tenant complained to the DHCR that he was rent stabilized and that landlord had refused to renew his lease. He claimed that landlord had illegally deregulated the apartment. The DRA ruled for tenant. Landlord appealed and lost before the DHCR. Landlord then filed an Article 78 court appeal and argued that DHCR's decision was arbitrary and capricious. The court ruled against landlord, finding the DHCR's decision to be reasonable.

Landlord claimed that the apartment's legal rent exceeded the $2,000 deregulation threshold when tenant moved into the unit in 2003. Landlord claimed a sublease between tenant and a subtenant created a legal regulated rent for the apartment. But the subtenant wasn't a tenant and had lived rent-free in the apartment. DHCR registrations at the time listed the unit as owner or employee occupied/temporarily exempt during the years the subtenant lived there. So the DHCR rationally concluded that there was no valid vacancy deregulation. The DHCR also reasonably determined that the purported sublease couldn't create a legal regulated rent. To obtain high-rent vacancy deregulation in 2003, the landlord had to comply with RSL Section 26-504.2(b) and give notice to the first tenant after exemption and send that tenant a DHCR registration statement, indicating the last regulated rent, the reason the apartment no longer was rent regulated, a calculation of how the rent was calculated to exceed $2,000 per month, a statement that the last legal regulated rent may be verified by contacting the DHCR, and the DHCR's address. "The high rent vacancy increase of an apartment was never automatic." The DHCR also found that the apartment was improperly registered in 2003.

65 Spring Realty LLC v. DHCR: Index No. 156324/2022, 2023 NY Slip Op 33023(U)(Sup. Ct. NY; 8/30/23; Sattler, J)