Proof of Payment Required to Prove Building Was Substantially Rehabbed

Landlord applied in 2020 for a ruling that its building was exempt from rent stabilization due to substantial rehabilitation. Landlord claimed that the building was in a substantially deteriorated condition due to a 2013 fire, that the building then became vacant, and that prior landlord replaced more than 75 percent of the building systems. Landlord bought the building in 2018 and completed the rehab work shortly thereafter. The DRA requested from landlord proof of payment for the work done, but the prior landlord had died and his spouse told landlord that its records had been destroyed in a flood resulting from Hurricane Sandy. Landlord also was unable to obtain a sworn statement from prior landlord's contractor. The DRA ruled against landlord but said that landlord could refile its application if it later obtained proof of payment for the work performed.

Landlord appealed and lost. Landlord had stated in its application that the sub rehab work was performed between 2015 and 2018. Hurricane Sandy hit New York City on Oct. 29, 2012. So, landlord's claim that prior landlord's payment records for the sub rehab work were destroyed during Hurricane Sandy lacked merit. DHCR Operational Bulletin 95-2 provided that "proof of payment by the owner for the rehabilitation work may be required; owners are advised to maintain records related to the rehabilitation." So proof of payment is required in order for the DHCR to rule on whether a substantial rehabilitation exempted the building from rent stabilization.

333 28th Street LLC: DHCR Adm. Rev. Docket No. KP10022RO (7/8/22)[4-pg. document]