Landlord Didn't Submit Proof of Financial Ability to Complete Demolition

In 2019, landlord filed a demolition application with the DHCR, seeking permission to refuse to renew the lease and to proceed for eviction against the last remaining rent-stabilized tenant in its apartment building. The DRA ruled against landlord, who appealed and lost. The DHCR found that landlord's demolition plan was insufficient in terms of the scope of the "undertaking" and financial ability to complete the project. Landlord filed an Article 78 court appeal, which was opposed by both the DHCR and the tenant.

The court ruled against landlord, finding that the DHCR's decision was reasonable, and not arbitrary or capricious. Landlord violated Rent Stabilization Code (RSC) Section 2524.5(a)(2)(i) by failing to provide sufficient financial documentation requested by the DRA. As set forth in DHCR Operational Bulletin 2009-1, landlord was required to submit proof of funds placed into a segregated bank account that were to be used for the sole purpose of completing demolition work. By failing to present such documents, landlord failed to demonstrate its financial ability to complete the demolition.

First NY, LLC v. DHCR: Index No. 155909/2021, 2021 NY Slip Op 32236(U)(Sup. Ct. NY; 11/9/21; Edmead, J)