Apartment Became Exempt from Stabilization After J-51 Benefits Expired

In response to tenant's rent overcharge complaint, landlord asked the DHCR to rule on the apartment's regulatory status. Landlord claimed that the apartment had been deregulated due to high-rent vacancy. The DRA ruled for landlord and found that the apartment was exempt from rent stabilization. When the building's J-51 benefits expired in 2009, the legal regulated rent was above the $2,000 vacancy deregulation threshold in effect at that time.

Tenant appealed and lost. Tenant moved into the apartment in August 2010 under an unregulated lease at a monthly rent of $4,150. The DRA followed the DHCR's J-51 Rent Registration Initiative and J-51 Bulletin to determine how to calculate the legal rent. Since the lawful rent following expiration of J-51 benefits at the building was well in excess of $3,000 per month when tenant moved into the apartment, the apartment was exempt.

Also, landlord's failure to register the apartment's rent between 2002 and 2009 didn't require any change in the DRA's order. The DHCR's J-51 Bulletin provides that "Owners are also not being directed to file late registrations for missing years subsequent to the registration that indicated the deregulation event." And where, as in this case, landlord had discontinued DHCR rent registrations based on a justifiable belief that the apartment wasn't subject to rent regulation, it shouldn't be penalized by rolling the rent back to the last registered rent.

Petersohn: DHCR Adm. Rev. Docket No. FR410060RT (9/25/18) [6-pg. doc.]