Landlord Fails to Demonstrate That Building Was Substantially Rehabbed

Landlord applied in 2022 for a ruling from the DHCR that its building was exempt from rent stabilization due to substantial rehabilitation. After it bought the building in 2015, landlord commenced renovations in March 2016 and completed them in February 2017. Landlord claimed that the building was gut-rehabbed and that two of the building's six apartments remained occupied during the renovation. The DRA ruled against landlord, who appealed and lost. The DRA found that landlord hadn't shown that the building was seriously deteriorated or 80 percent vacant when the rehab work started, and that renovation of four vacant apartments in a six-unit building didn't meet the criteria for substantial rehabilitation set forth in RSC Section 2520.11(e) or DHCR Operational Bulletin 25-2. 

Landlord argued that the DRA failed to consider that certain individual apartments may already have been exempted from rent regulation by high-rent vacancy deregulation and that the DRA's order therefore should be modified. But the DHCR said that this claim was outside the scope of the proceeding that was before the DRA. The only issue before the DRA was whether the building was exempt from rent regulation due to substantial rehabilitation. The DHCR didn't need to determine in this proceeding whether certain apartments were legally deregulated by other means. The portion of the DRA's order directing landlord to register apartments and offer rent-stabilized leases wouldn't apply to such units if they were legally deregulated by other means.

Troutman Lofts LLC: DHCR Adm. Rev. Docket No. KV110004RO (12/6/22)[3-pg. document]