Landlord Proved Building Was Substantially Rehabilitated in 1988-1989

Landlord applied to the DHCR in 2023 for a ruling that its building was exempt from rent regulation due to substantial rehabilitation of the building in 1988-1989. The DRA ruled against landlord, finding that landlord failed to produce substantive proof to demonstrate that the scope of the rehab involved the complete replacement of at least 75 percent of the building-wide and apartment systems. The DRA found that the work permits and independent architect's affidavit didn't support the sub rehab claim and that landlord failed to submit proof including renovation costs, work contracts, invoices, proof of payment, and photographs.

Landlord appealed and won. When the sub rehab project began, the building contained 14 of the 17 systems listed for consideration in DHCR Operational Bulletin 95-2. The building contained no elevators, incinerators, or intercoms. Proof submitted, including a letter from a registered architect (the architect who had worked on the project had died) showed that the prior owner replaced 11 out of 14, or 78 percent, of the building/apartment systems. This exceeded the 75 percent requirement set forth in Operational Bulletin 95-2. Landlord also installed an intercom, where none had previously existed. Landlord's expert statement explained that plumbing, heating, gas supply, electrical, windows, doors and frames, interior staircase, kitchen, bathrooms, and all floors, ceilings, and walls in the apartments and common areas had been replaced. Landlord also had submitted DOB documents including the work permit, building alteration outline, plans filed by the original architect, a cost statement, confirmation that the building was vacant, inspection report, and the new C of O issued in October 1989. The absence of work records, invoices and cancelled checks, particularly records that pre-dated Operational Bulletin 95-2 and were 35 years old, didn't negate the substantial rehabilitation. Landlord also showed that the building was vacant when the sub rehab project commenced.

Clarista Realty Corp.: DHCR Adm. Rev. Docket No. MV210003RO (1/21/25)[5-pg. document]