Landlord Proves Building Was Substantially Rehabbed and J-51 Benefits Expired

Landlord asked the DHCR to rule on building’s rent stabilization status. Landlord claimed that the building had been substantially rehabilitated after Jan. 1, 1974. The DRA ruled for landlord and found the building was exempt from rent stabilization based on substantial rehabilitation.

Tenants appealed and lost. Landlord’s architect stated that a gut rehab took place between 1985 and 1987. He said that, in 1985, the previously adjoining two buildings were vacant and in substantially deteriorated condition. They were combined into one building and a Certificate of Occupancy was issued. More than 75 percent of the building-wide and individual apartment systems were replaced, including plumbing, heating, gas services, electrical, intercoms, windows, doors and frames, roof, exterior pointing and stucco, interior stairway, kitchens, bathrooms, as well as all new walls, floors, and ceilings in the apartments and common areas. A new elevator also was installed. The work cost $1,500,000, and the building received J-51 tax benefits from 1989 to 2006. A DOB Altered Building Application also supported landlord’s claim.

The DRO did rule that any tenants living in the building during the J-51 tax abatement period that expired on June 30, 2007, and who didn’t receive proper notice of the tax abatement in their initial lease and subsequent renewal leases remained rent stabilized until they moved out. The DHCR pointed out that there is no time limit for filing an application for exemption from rent regulation based on substantial rehabilitation which, in this case, occurred 30 years earlier. Contrary to tenants’ claim, landlord wasn’t required to obtain a Certificate of Vacancy from DOB, and the DHCR wasn’t required to independently verify that the building was vacant in 1985. There also was no proof of any fraud by landlord’s architect. 

Ribas: DHCR Adm. Rev. Docket No. DW410014RT (3/22/16) [10-pg. doc.]