Court of Appeals Upholds Prevention of Luxury Deregulation After June 14, 2019 Despite Pre-HSTPA Deregulation Orders

In separate DHCR proceedings, landlord applied for high-rent/high-income deregulation of three rent-stabilized apartments. In each case, the DRA issued an order of deregulation prior to June 14, 2019, which each explained that the units remained subject to rent stabilization until the expiration date of the renewal lease in effect on the date the deregulation order was issued.

Shortly after the June 14, 2019, enactment of the HSTPA, the DRA issued "explanatory addenda" in connection with each of the deregulation orders to advise landlord that, since luxury deregulation had now been repealed, the three apartments would no longer be subject to deregulation when current leases expired after June 14, 2019.

Landlord appealed and lost before the DHCR, then filed an Article 78 court appeal that was denied. Landlord further appealed and lost before the 1st Department appeals court. Landlord then appealed to New York's highest court, which ruled against landlord and held that the DHCR had properly interpreted Part D of the HSTPA and that the DHCR's decision didn't constitute an impermissible retroactive application of the law.

The Court reasoned that, under pre-HSTPA law, an apartment's deregulated status officially occurred at the expiration of the lease in effect at the time the deregulation order was issued. For the three apartments in question, the DRA's deregulation orders were issued prior to enactment of HSTPA on June 14, 2019. But those leases in effect when the deregulation orders were issued didn't expire, respectively, until June 30, 2019; July 31, 2019; and June 30, 2020. By the time those leases expired, high-rent/high-income deregulation had been repealed by the HSTPA and was no longer available to deregulate the apartments. These apartments therefore fell outside any deregulation provision because there was no statute authorizing the DHCR to exempt previously qualifying apartments from rent stabilization after June 14, 2019. The issuance of luxury deregulation orders before June 14, 2019, didn't mean the subject apartments immediately became exempt from rent regulation.

160 E 84th St. Assoc. LLC v. DHCR: Case No. 111, Index No. 157557/20, 2024 NY Slip Op 06377 (NY Ct. App.; 12/19/24; Troutman, J, Wilson, CJ, Rivera, Garcia, Singas, Cannataro, Halligan, JJ [concur])