DHCR Deemed Renewal Lease for Tenant Who Had None on Date of Deregulation Order

Landlord applied for high-rent/high-income deregulation of rent-stabilized tenant's apartment in 2016. In April 2019, the DRA ruled for landlord based on its finding that tenant's total annual household income in 2014 and 2015 was over $200,000. In September 2019, the DRA sent landlord an Explanatory Addenda (EA), pointing out that tenant's apartment was deregulated upon expiration of the lease that was in effect on April 19, 2019, when the DRA's deregulation order was issued. The EA further advised that, if such lease expired on or after June 14, 2019, the apartment could no longer be deregulated because HSTPA ended deregulation in general from that point forward.

Landlord appealed the EA order, claiming that it was unlawful and that there was no lease in effect for tenant on April 19, 2019. The DHCR ruled against landlord. Landlord then filed an Article 78 court appeal, and the parties agreed to send the case back to the DHCR for further consideration.

The DHCR again denied landlord's general objections to the EA, noting that it was based on the rent stabilization law as it existed prior to enactment of the HSTPA. Landlord also pointed out that, in this case, there was no rent-stabilized renewal lease in effect for tenant on April 19, 2019. But, since the apartment was rent stabilized prior to April 19, 2019, a rent-stabilized lease should've been in effect on the day that the DRA's order was issued. Tenant's last renewal lease had expired on Feb. 29, 2019, and landlord was required to renew tenant's lease even while its luxury deregulation application was pending. Landlord argued that it had sent tenant a lease nonrenewal notice based on claimed nonprimary residence. But landlord's 2016 deregulation application was contrary to its nonprimary residence claim against tenant. Landlord also had discontinued an eviction proceeding commenced against tenant based on nonprimary residence. Even if landlord was justified in not renewing tenant's lease in 2019, subsequent registrations and discontinuance of its eviction proceeding supported the DHCR deeming a renewal lease for tenant effective March 1, 2019. So, by the time that renewal lease would have expired, deregulation of rent-stabilized apartments was no longer permitted by law.

Slater/SP 41 Park LLC: DHCR Adm. Rev. Docket Nos. JP410003RP, JP410004RP (10/12/21)[11-pg. document]