Tenant Buy-Outs Proved Building Wasn't in Substandard Condition When Rehab Work Began

Landlord applied to DHCR for a ruling that its building was exempt from rent stabilization based on substantial rehabilitation that took place after landlord bought the building in 2010 and completed the rehab in 2016. The DRA ruled against landlord, finding that the architectural plans presented by landlord didn't show any form of change to the building's structure, that there was no new certificate of occupancy to legitimize the new floor claimed, and that the affidavit of landlord's architect didn't confirm any structural changes to the building. Landlord also didn't clearly show that the building was in substandard condition or at least 80 percent vacant when the renovation commenced, and didn't show that the building/systems complied with all applicable building codes and requirements. The DHCR denied landlord's PAR.

Landlord then filed an Article 78 court appeal, and the DHCR took the case back for further consideration in 2021. The DRA issued a new order in 2023 and again denied landlord's application. The DRA found that since four of the six tenants in occupancy prior to commencement of the work had moved out due to buy-out agreements, the vacancy percentage alone didn't satisfy the presumption that the premises was substandard or seriously deteriorated. The DRA also found that landlord failed to otherwise prove that the building had been in substandard condition. 

Landlord appealed and lost. The buyouts themselves proved that the apartments had value and were habitable as opposed to being seriously deteriorated. Photographs submitted by the landlord also didn't show that there had been a substandard or seriously deteriorated condition. [Download PDF of decision here.]

852 Hart LLC: DHCR Adm. Rev. Docket No. LP210003RO (7/18/23)[7-pg. document]