Appeals Court Upholds Dismissal of Luxury Deregulation Applications Still Pending When HSTPA Enacted

Landlord filed two separate applications with the DHCR, in 2017 and 2018, seeking high-rent/high-income deregulation of tenant's rent-stabilized apartment. These applications were still pending before the DHCR on June 14, 2019, when the HSTPA was enacted and high-rent deregulation was abolished prospectively. The DHCR then terminated landlord's applications and denied landlord's PARs of those decisions.

Landlord then filed an Article 78 court appeal of the DHCR's rulings and argued that the DHCR engaged in an impermissible retroactive application of the HSTPA. Landlord pointed out that the DHCR had failed to comply with mandated timelines set forth in the Rent Stabilization Law, and argued that the DHCR's processing delay was the reason that no timely decisions were issued. In response, the DHCR claimed that, once the HSTPA was enacted, the law prevented the agency from issuing deregulation orders and at that point an apartment that was rent stabilized before June 14, 2019, remained regulated. The court ruled for landlord. 

The DHCR appealed and won. The appeals court reversed the lower court's decision, holding that the DHCR rationally concluded that Part D of the HSTPA stripped the agency of its authority to issue a deregulation order for the apartment that relied on the prior high-income deregulation provisions of the RSL. The appeals court also found that landlord failed to prove that the DHCR's "significant delay" in processing landlord's applications was caused by the agency's negligence or willfulness. 

305 Riverside Corp. v. DHCR: Index No. 150659/23, App. No. 1180, Case No. 2023-01984, 2025 NY Slip Op 01057 (App. Div. 1 Dept.; 2/25/25; Kern, JP, Singh, Kennedy, Mendez, Rodriguez, JJ)