Landlord Must Give Improperly Deregulated Tenant a Rent-Stabilized Lease

Tenant complained to the DHCR that his apartment had been illegally deregulated and that landlord refused to renew his lease. Landlord argued that, while prior landlord owned the building, a subtenant moved into the unit in 2003 at $1,800 per month. Then tenant moved in at the end of 2003 with a 17 percent vacancy increase, resulting in a monthly rent of over $2,000, resulting in vacancy-deregulation. Tenant claimed that prior landlord's niece paid no rent but lived in the building as that owner's family member. The $1,800 rent charged to prior subtenant was an illegal market rent. The DRA ruled for tenant and ordered landlord to give tenant a rent-stabilized lease.

Landlord appealed and lost. The DRA properly looked at apartment rent history records going back more than four years in order to determine whether the deregulation was proper. Prior landlord never treated any tenant in the building as rent stabilized and admitted that he allowed family members, including his niece, to live in the unit rent free. There was no lease to prove otherwise. If the prior subtenant paid rent, this didn't create any rent-stabilized subtenancy with a legitimate legal regulated rent. RSC Section 2520.11(r)(4) requires that there be a legitimate LRR upon which a legal deregulation must be based. Otherwise, there can be no deregulation. And, where tenants aren't offered a rent-stabilized lease following an extended vacancy, those tenants' rents cannot form the basis of a legal regulated rent. Here, the apartment was registered as deregulated at a time when prior landlord admitted the unit was temporarily exempt due to owner occupancy. It also was impossible to legally deregulate the apartment in 2003 because the subtenant was still living there. 

65 Spring Realty LLC: DHCR Adm. Rev. Docket No. JX410018RO (6/1/22)[4-pg. document]