High-Rent Vacancy Deregulation Was Proper Based on IAI Rent Increase

Landlord sued to evict tenant for nonpayment of rent in 2019 and claimed that tenant's apartment was unregulated. Tenant argued that the deregulation was improper and asked the court to dismiss the case. The court ruled for tenant.

Landlord appealed and won. When prior rent-stabilized tenant moved out in 2017, the legal regulated rent was $1,154 per month. Landlord spent over $80,000 on individual apartment improvements (IAIs) before tenant moved in, which increased the legal rent to more than $2,700, which was the vacancy-deregulation threshold in effect at that time. Tenant moved into the unit in 2019 and paid a preferential rent of $2,900. The lower court found that high-rent deregulation was permitted only if the legal regulated rent was $2,700 or more at the moment of vacancy. The appeals court found that this was incorrect. The apartment had a legal rent of $2,700 in 2019 following the IAI increases. The apartment became vacancy-deregulated at that point.

326 Starr LLC v. Martinez: Index No. 2021-108, 2021 NY Slip Op 21358, NYLJ No. 1642131842 (App. T. 2 Dept.; 2/22/21; Aliotta, PJ, Toussaint, Golia, JJ)