Sub Rehab Application Denied Based on Landlord's Refusal to Submit Lease Records

Landlord asked the DHCR in 2017 for a determination that its building was exempt from rent regulation based on substantial rehabilitation. The DHCR ruled against landlord, who then filed an Article 78 court appeal, claiming that the DHCR's decision was arbitrary and unreasonable.

The court ruled against landlord, finding that the DHCR identified a rational justification for denying landlord's application. Landlord acknowledged that its application was denied because it didn't provide leases, lease renewals, or preferential rent riders for the current tenants, but insisted that it didn't have to do so. Landlord claimed that it never gave tenants rent-stabilized leases and argued that this should've been enough for the DHCR.

The DHCR maintained that it wasn't given sufficient information to assess landlord's application. The DRA found that the building had been occupied by tenants with rent-stabilized leases and preferential rents since at least 2011. The building also had been registered with the DHCR up to 2021. The DRA had requested leases, stating that they may provide information as to the status of the work, reasons for giving tenants rent-stabilized leases, whether work was part of a single action or a series of upgrades, and ascertain whether tenants in place before completion of the work were entitled to continued rent stabilization protection.  

8 Ave Holdings LLC v. DHCR: Index No. 153005/2023, 2023 NY Slip Op 32588(U)(Sup. Ct. NY; 7/27/23; Bluth, J)