Newly Created Apartment Was Exempt from Rent Stabilization

Tenant complained to the DHCR of rent overcharge and improper apartment deregulation. Landlord pointed out that tenant's apartment was created in 2002, and showed valid 1999 DOB permits. The first tenant of that apartment paid $2,500 per month in rent, which was above the deregulation threshold then in place. Landlord also showed that the rent was $2,595 in 2013; $2,765 in 2015; and $2,915 in 2017. So landlord never registered the unit with the DHCR as rent stabilized. The DRA ruled against tenant, finding that the newly created apartment was legally and permanently exempted from rent stabilization in 2002.

Tenant appealed and lost. Tenant argued that landlord didn't get a proper certificate of occupancy (C of O) when it created the apartment and therefore was precluded from collecting rent because an illegally altered apartment can't be occupied without a C of O. Tenant also said that landlord didn't submit documentation that any renovations were made or that there was any DOB approval of renovations. Tenant further claimed that landlord may have engaged in a fraudulent scheme to deregulate the apartment.

The DHCR disagreed, finding that landlord was entitled to collect a first rent for the newly created apartment in 2002. Landlord had submitted proof that renovations creating the new unit were completed. And an apartment that was properly deregulated prior to June 14, 2019, remains deregulated. Whether landlord required a C of O, or whether there were other DOB issues, didn't affect the correctness of the finding by the DHCR that landlord created a new apartment.

Miller: DHCR Adm. Rev. Docket No. KO410008RT (6/2/22)[3-pg. document]