DHCR Found Proof of Prior Substandard Condition Was Insufficient

Landlord applied to the DHCR for a ruling that its building was exempt from rent regulation due to substantial rehabilitation of the building after Jan. 1, 1974. The DRA pointed out that, under RSC Section 2520.11(e)(3), the sub rehab must have commenced in a building that was in a substandard or seriously deteriorated condition and that a vacancy percentage of 80 percent could constitute proof of that condition.

The DRA ruled against landlord, finding that since five out of the six tenants in the building moved out due to surrender agreements, the vacancy percentage alone didn't satisfy the presumption that the building was substandard or seriously deteriorated and that the landlord otherwise failed to prove such condition of the building.

Landlord appealed and lost. The DHCR found that nothing in the tenant surrender agreements implied or established that substandard conditions were the reason that the tenants accepted the buyouts offered. Payments to tenants to incentivize them to vacate showed that the units had significant value and were not in substandard condition. These buyouts didn't show the substandard condition of the apartments or building, but instead reflected an effort to empty the building for the purpose of removing it from rent stabilization. Photographs submitted by landlord showing before-and-after conditions also didn't show substandard condition. [Download PDF of decision here.]

Cypress Hills Ventures LLC: DHCR Adm. Rev. Docket No. LQ110017RO (7/24/23)[4-pg. document]