Luxury Deregulation of Rent-Controlled Apartment Isn't Retroactive

Landlord applied in 2010 for high-rent/high-income deregulation of tenant's rent-controlled apartment. The DRA ruled for landlord in March 2014 after finding that tenant's annual household income exceeded the deregulation threshold in both 2008 and 2009. The deregulation order was made effective as of March 1, 2014.

Landlord appealed and lost. Landlord claimed that the effective date of deregulation should be retroactive to March 1, 2011 under applicable law. The DHCR noted that landlord correctly stated the law but that it was the DHCR's processing policy to make high-rent/high-income deregulation orders for rent-controlled apartments effective prospectively after the date an order was issued. The DHCR claimed that this was consistent with the rules for rent-stabilized apartments, which called for deregulation upon expiration of the lease in existence at the time the deregulation order is issued. In addition, the Rent Control Law requires landlord to offer tenant a rental at market rent upon deregulation. This provision would be meaningless if the deregulation order was applied retroactively. Other rent control regulations also generally provide for prospective application only.

Bronstein Properties, LLC: DHCR Adm. Rev. Docket No. BQ420018RO (9/18/14) [5-pg. doc.]