Building That Was 80% Occupied When Work Began Wasn't Substantially Rehabbed

Landlord asked the DHCR for a ruling on a building's rent-regulatory status. Landlord claimed that the building was exempt from rent stabilization due to substantial rehabilitation performed between February 2016 and April 2017.

The DRA ruled against landlord, finding that landlord failed to demonstrate that the building was in substandard condition or at least 80 percent vacant when the work was commenced. The DRA also found insufficient proof that the work complied with all applicable building code requirements or that the work was done in accordance with DHCR Operational Bulletin 95-2.

Landlord appealed and lost. Landlord had admitted to the DRA that there were tenants living in the building when construction started but that they moved out of the first floor before work began on upper floors. And DOB violations showed that two of the six apartments were occupied when work started. Any presumption that the building was in substandard condition required at least 80 percent vacancy. Also, landlord's DOB application described the work to be done as merely interior remodeling and new plumbing fixtures. There also was a lack of DOB permits and sign-offs, including for electrical work. The proof of costs submitted also wasn't specific enough.

SH Harman LLC: DHCR Adm. Rev. Docket No. IV210004RO (1/8/21) [12-pg. doc.]