Apartment Was Properly Deregulated After J-51 Tax Benefits Expired

Tenant moved into her apartment under a market-rate lease in 2021. In 2023, she filed a rent overcharge complaint with the DHCR, claiming improper deregulation of her unit. The DRA ruled against tenant. The apartment's rent reached the deregulation threshold while the building was receiving J-51 tax benefits that expired on June 30, 2015. The apartment then became deregulated before the apartment's Jan. 20, 2017, base rent date and before tenant moved into the apartment.

Tenant appealed and lost. Although the DRA misstated a few facts of the rent history, the unit was still vacancy-deregulated when tenant moved in. The base rent date was June 14, 2015, and landlord was still receiving J-51 tax benefits on that date. The rent charged and paid by a prior tenant on the base rent date was $2,595. When that tenant moved out on July 31, 2015, the apartment became legally deregulated when the next tenant moved in on Aug. 1, 2015, with a legal rent exceeding the then $2,700 monthly rent. Deregulation of the apartment therefore began six years before the complaining tenant moved in. There also was no fraud by landlord in this case. Landlord's failure to register the apartment from 2013 to 2015 occurred before the DHCR published its directive on how to register J-51 apartments, and there can be no fraud in failing to register after 2015 because the unit was legally deregulated on Aug. 1, 2015.

Dinh: DHCR Adm. Rev. Docket No. MP410013RT (10/15/24)[7-pg. document]