Rent-Controlled Tenant Not Subject to Deregulation After J-51 Benefits Expired

Landlord filed a high-rent/high-income deregulation application for tenant's rent-controlled apartment in 2014. Landlord claimed that tenant's monthly rent was $2,500 or more and sought verification of whether tenant's household income exceeded $200,000 for both 2012 and 2013. The DRA ruled against landlord because the building had previously been subject to J-51 tax benefits and, by law, affected rent-controlled units remained exempt from luxury deregulation after J-51 benefits expired.

Landlord appealed and lost. Landlord argued that the DRA's reliance on a prior Appellate Division decision also involving landlord and a different tenant was misplaced. Landlord claimed that the Appellate Division decision was inconsistent with the 2009 Roberts decision by New York's highest court. The DHCR noted that the Roberts decision involved rent-stabilized apartments in buildings receiving J-51 tax benefits. And, unlike the Rent Stabilization Law, there is nothing in the rent control law that provides for the resumption of availability of high-income rent deregulation after J-51 tax benefits have expired. Non-purchasing rent-controlled tenants like tenant in this case, who occupied an apartment that originally became rent regulated for reasons other than the building's receipt of J-51 tax benefits and that subsequently converted to cooperative ownership prior to the receipt of J-51 tax benefits, continue to be rent controlled and aren't subject to high-income rent deregulation once J-51 tax benefits have been received.

RAM I LLC: DHCR Adm. Rev. Docket No. FR420059RO (8/15/18) [7-pg. doc.]