Landlord Improperly Deregulated Apartment in 421-g Building

Tenant complained to the DHCR that her apartment was unlawfully deregulated while receiving Section 421-g tax benefits and that she was overcharged. Tenant moved into the unit on Jan. 15, 2015, and paid $3,164 per month. Landlord argued that the apartment was deregulated when the initial rent was established at $3,164 per month, because this was higher than the deregulation threshold then in effect at the time.

The DRA ruled for tenant. The apartment wasn't deregulated because New York's highest court ruled in 2019 in the case of Kuzmich v. 50 Murray St. Acquisition LLC [see LVT #30206] that an apartment couldn't be deregulated while receiving 421-g tax benefits. In addition, the legal rent was the rent charged on the base date and landlord waived the higher legal regulated rent by charging tenant a lesser rent. 

Landlord appealed and lost. Landlord incorrectly argued that the 2019 Regina Metro v. DHCR court decision shielded landlord from penalties under the Rent Stabilization Law (RSL) when there is a misunderstanding of the law. And in this case there was no finding of fraud and no imposition of triple damages. In addition, the Kuzmich decision didn't create new law but merely found that a landlord was always required to treat 421-a apartments as rent stabilized under RSL Section 26-504.1. And unlike the history of J-51 cases, the DHCR wasn't involved with any confusion regarding deregulation of an apartment in a building receiving 421-g tax benefits. The DRA properly found that landlord waived the legal regulated rent by charging less than allowable vacancy increase that would've been permitted after the unit's base date. 

Ninety Five Wall Street LLC: DHCR Adm. Rev. Docket No. JS410040RO (11/19/21)[3-pg. document]