March 2024 Insights
By Eileen O’Toole, Esq., Contributing Editor
On Dec. 22, 2023, Governor Hochul signed into law amendments to the Rent Stabilization Law, ETPA, and rent control laws passed by the Legislature under State Senate Bill S2980C. The governor’s sign-off, however, included a proviso requiring the Legislature to issue “Chapter Amendments” to the modified laws. The Legislature introduced these proposed Chapter Amendments on Jan. 4, 2024, and on March 1, 2024, the governor signed State Senate Bill No. S8011 into law (LVT #33132).
Among other things, the Chapter Amendments removed retroactive application of a new requirement that owners who claim exemption from rent stabilization of a building substantially rehabilitated after Dec. 31, 1974, must obtain an order from the DHCR approving such claim. In other words, applications to the DHCR are now required for substantial rehab work initiated only on or after Jan. 1, 2024.
The Chapter Amendments also narrowed provisions concerning fraud in connection with improper deregulation of a rent-regulated apartment. The Chapter Amendments require a determination on “whether the owner knowingly engaged in such fraudulent scheme after a consideration of the totality of the circumstances.” By considering the totality of the circumstances, the Chapter Amendments eliminate from the December 2023 amendments to the law mistakes or misunderstandings being considered fraud.
The DHCR again has ruled that changes to rent law provisions on MCI rent increases made by the HSTPA effective June 14, 2019, were properly applied to applications pending on that date. In Matter of 26 Grove NY LLC (LVT #33105), the DHCR applied this ruling to the 2 percent limit on annual MCI increase collectability. And in Matter of Georgetown Investors, LLC (LVT #33116), the DHCR again upheld application of the HSTPA provision to pending MCI applications to bar MCI increase where fewer than 35 percent of a building’s apartments were rent regulated. The Georgetown decision provides a summary of a number of court and DHCR decisions that have upheld similar rulings to date.
Despite protest by the tenant, the DHCR also has ruled again that it cannot order an owner to refund any portion of a security deposit to a tenant after a tenant has moved out. In Matter of Eick (LVT #33114), the DHCR noted that it had no authority to rule on security deposit issues under these circumstances and claims must be addressed to the state Attorney General or raised in a court action.
In 251 W. 74 Owners Corp. v. DHCR (LVT #33128), a court recently found that a DHCR building-wide rent reduction order was unreasonable and must be revoked where the order named the co-op corporation that owned the building as the party responsible for providing the laundry room service in question but failed to name as a party to the proceeding the shareholder/proprietary lessee who was the tenants’ landlord and the party who collected rent.
Two housing court decisions again have underscored that an owner cannot seek eviction for nonpayment of rent where there is no lease in effect when the proceeding is commenced. In 594 Rogers BH LLC v. Frederick (LVT #33103) and 109th Affordable Housing, LLC v. Beck (LVT #33097), the courts point out that the owner could commence a plenary proceeding for the money owed or a holdover proceeding based on lease nonrenewal if the tenant had refused to sign a renewal lease.