DHCR Must Reinspect, Issue New Ruling

Landlord appealed a DHCR ruling that two adjacent buildings together formed a horizontal multiple dwelling (HMD) subject to rent stabilization. Landlord claimed that the DHCR's decision was arbitrary and unreasonable. First, the DHCR didn't decide what date applied to determining HMD status, as directed by a prior court ruling. Second, landlord claimed that the inspection that the DHCR relied on to make its ruling was conducted improperly and unfairly. Landlord bought the buildings in 1985. Each building had fewer than six apartments, but together the two had more than six. The two buildings were built at different times for separate owners. In 1954, they came under joint ownership. The buildings had different designs, heights, architectural features, layouts, certificates of occupancy, and multiple dwelling registrations. Since 1954, the building remained under single ownership, were jointly managed, and some building systems were modified from time to time to serve both buildings.
The court ruled for landlord and sent the case back to he DHCR. While DHCR could make its ruling on the basis of its inspector's report instead of holding a hearing, the procedure in this case had been unfair. The inspection originally was scheduled to provide both sides a chance to be there, but the DHCR changed the inspection time shortly before it occurred, without notice to tenants. The inspector refused to conduct reinspection with landlord present. The court instructed the DHCR to reinspect, using a different inspector. And the DHCR must explain in detail in any new determination how and why the inspector accepted or rejected claims concerning the building's HMD status. The DHCR also must first determine the applicable date for HMD status before further proceedings. Landlord also asked the court to require the DHCR to issue regulations for deciding HMD status, but the court ruled it had no authority to make the DHCR issue regulations.

Sherwood Associates v. DHCR: Index No. 115961/07 (11/17/08)(Sup. Ct. NY; Stone, J); discussed in NYLJ, 1/21/09, p. 8, col. 3.