January 2025 Insights
By Eileen O’Toole, Esq., Contributing Editor
New York’s highest court recently upheld the DHCR’s reversal of certain luxury deregulation applications granted before June 14, 2019, where the rent-stabilized renewal leases involved didn’t expire until after that date. Prior to enactment of the Housing Stability and Tenant Protection Act of 2019 (HSTPA), the Rent Administrator had granted owners’ applications for high-rent/high-income deregulation of rent-stabilized apartments in a number of proceedings where the units remained rent stabilized until the expiration dates of the rent-stabilized renewal leases in effect on the date the deregulation orders were issued.
In each of these cases, the DRA had issued "explanatory addenda" shortly after HSTPA became effective. These effectively supplemental orders advised the owners that, since luxury deregulation had now been repealed, the apartments that received deregulation orders would no longer be subject to deregulation when current leases expired after June 14, 2019. All of the many owners who appealed these decisions lost before the DHCR.
Owners participating in the case before the Court of Appeals had filed and lost Article 78 court appellate courts, appealed and lost before appellate courts, and finally brought the issue before the top state court, which found that the DHCR's decisions did not constitute an impermissible retroactive application of the Rent Stabilization Law.
In 160 East 84th St. Assoc. LLC. v. DHCR (LVT #33520), the Court of Appeals found that, under pre-HSTPA law, an apartment's deregulated status officially occurred at the expiration of the lease in effect at the time the deregulation order was issued. For the apartments involved, the DRA's deregulation orders were issued prior to enactment of HSTPA on June 14, 2019. But the leases in effect when the deregulation orders were issued did not expire, respectively, until the subsequent renewal lease termination date. Since, by the time those leases expired, high-rent/high-income deregulation had been repealed by HSTPA, the Court found that deregulation was no longer available because there was no statute authorizing the DHCR to exempt previously qualifying apartments from rent stabilization after June 14, 2019. In other words, the issuance of luxury deregulation orders before June 14, 2019, did not mean that the apartments immediately became exempt from rent regulation.
For further discussion of the owners’ legal argument that the DHCR’s explanatory addenda constituted improper retroactive application of the amended Rent Stabilization Law, see Niles Welikson, Court of Appeals Permits Retroactive Application of HSTPA to Vitiate Final Deregulation Orders (NY Apartment Law Insider).
The Court of Appeals also recently addressed a question concerning inheritance of a co-op apartment, holding that a shareholder-tenant’s romantic partner could not be deemed a “spouse” under New York City’s Human Rights Law. In McCabe v. 511 W. 232nd Owners Corp. (LVT #33524), the surviving partner of a shareholder-tenant sought transfer of the apartment shares and proprietary lease in accordance with the shareholder’s lease. The Court upheld the co-op board’s refusal to transfer the shares, ruling that the term “marital status” in the NYC Human Rights Law referred only to whether someone was single, married, divorced, separated, or widowed, and not to their relationship to a particular person.
An appeals court upheld a prior court stipulation that deemed tenants to be rent stabilized, which permitted succession rights for the tenants’ daughter where these rights were included under stabilization and the stipulation did not exclude succession rights from the agreement with the now deceased tenants (see LVT #33530).
In Syllman v. DHCR (LVT #33521), another appellate court determined that the DHCR must look back beyond the statutory four-year base date to calculate an apartment’s legal rent where tenant’s application was not for a rent overcharge ruling or damages but sought instead a calculation of the apartment’s legal regulated rent. Therefore, application of RSL Section 26-516(h) wouldn't have the same problematic retroactive effect as found by New York's highest court in Regina Metro. Corp. LLC v. DHCR (2020).