December 2023 Insights

By Eileen O’Toole, Esq., Contributing Editor

As announced last month, the DHCR published amendments to the Rent Stabilization Code (RSC) that became effective on Nov. 8, 2023 (LVT #32912). At press time, amendments to the rent stabilization and rent control laws that were approved in June 2023 by the New York State Legislature remain unsigned by Governor Hochul. The deadline for the governor’s approval is Dec. 31, 2023. It is unclear whether some of the RSC amendments that did not result from HSTPA amendments to the Rent Stabilization Law (RSL), such as those concerning creating new apartments and regulatory exemption of buildings based on substantial rehabilitation, would hold up without similar statutory changes set forth in the proposed amendments to the RSL that as yet have not been approved by the governor.

Courts and the DHCR have revisited some themes in recent decisions. In Matter of 411-413 Park Avenue South Realty LLC (LVT #32983), the DHCR provides a good summary of court decisions to date that uphold the application of significantly restrictive HSTPA amendments to MCI rent increase applications that were pending on June 14, 2019.

As additional municipalities in New York adopt rent stabilization, the DHCR is facing requests for regulatory exemption rulings, and even for rent increases under existing Emergency Tenant Protection Act (ETPA) provisions. For example, some buildings in these communities that are presumed to be rent stabilized may in fact be exempt from rent stabilization under the law due to substantial rehabilitation that took place after Jan. 1, 1974. And in one case, Matter of SIRO 208 Albany Ave LLC (LVT #32989), the DHCR already has ruled on an application by a Kingston owner seeking to increase a tenant’s allegedly low rent on the basis of the rarely invoked “unique and peculiar circumstances” provision.

In several decisions, the DHCR recently found overcharges resulting from pre-base date rent reduction orders that remained in effect without rent restoration. These decisions rely on the 2010 NY Court of Appeals decision in Cintron v. Calogero. In that case, New York’s highest court did not apply treble damages to an overcharge finding resulting from the rent freeze that came with the rent reduction order. But in Matter of BSF 250-252 Sherman Holding, LLC (LVT #32996) and Matter of 618 Associates, LLC (LVT #32998), the DHCR did apply treble damages, noting that the Calogero decision came down 13 years ago and, in effect, that owners should now know better. Resulting overcharge determinations in these cases were substantial.

In Jekielek v. 260 Partners, LP (LVT #33005), the First Department appeals court reiterated its prior recent holding in Aras v. B-U Realty Corp. (see LVT #32964) that all elements of fraud must be shown to trigger an expanded lookback period and application of the default formula when deciding rent overcharge claims.