DHCR Upholds Application of HSTPA to Dismiss Luxury Deregulation Application

Landlord applied for high-rent/high-income deregulation of tenant's rent-stabilized apartment in 2017 after tenant failed to respond to the Income Certification Form (ICF) that landlord had sent him. In November 2019, the DRA ruled against landlord based on the HSTPA amendments to the Rent Stabilization Law, which repealed deregulation effective June 14, 2019.

Landlord appealed and lost. Landlord argued that the DRA incorrectly applied HSTPA retroactively and that the DHCR improperly delayed processing landlord's application by failing to follow required statutory time periods. The DHCR found that HSTPA didn't provide any exceptions to the revocation of luxury deregulation for apartments still subject to rent stabilization on June 14, 2019. And it didn't matter that a ruling on landlord's 2017 application would have depended on income information for 2015 and 2016.

The DHCR also denied any undue delay in processing landlord's application and pointed out that there were appellate court decisions saying that even if there was delay by an agency, "the express and explicit command of the legislature shall control." And, to be subject to challenge, any delay must have been "deliberate or negligent in anticipation of a change of statute." And, in another recent case, a court found no unreasonable delay where the DHCR took 16 months to issue a deregulation order. Also, the expiration of any time periods set forth for the DHCR's processing of luxury deregulation applications did not divest the DHCR from issuing its order.

The DHCR also found that dismissal of landlord's application was consistent with the 2020 Court of Appeals decision in Regina Metro. v. DHCR, where the court ruled that the revocation of certain HSTPA amendments applied only to specified rent overcharge provisions.

405 East 56th Street LLC: DHCR Adm. Rev. Docket No. HX410265RO (8/26/21)[6-pg. document]