Tenant in HDFC Rental Building Was Subject to Rent Stabilization

Tenant asked the DHCR to determine her rent-regulated status. Tenant claimed that the building had been converted in 1973 to an HDFC rental building under Article VIII of the Private Housing Finance Law. Landlord claimed that the building had been converted to a not-for-profit cooperative and that tenant owned shares to the apartment. The DRA ruled for tenant. Landlord submitted no proof that the apartment was a co-op unit and the HDFC's initial incorporation rendered the apartment ineligible for conversion to a co-op. The DRA set the legal rent at $800 per month, which was the first rent tenant paid.

Landlord and tenant both appealed. Landlord argued that either the apartment was a co-op or, alternatively, that the apartment was exempt from rent stabilization as part of a building operated exclusively for charitable purposes on a nonprofit basis under Rent Stabilization Code (RSC) Section 2520.11(j).

The DHCR ruled against landlord. The building, with 10 apartments, was built in 1923 and therefore was rent stabilized unless otherwise exempt. RSC Section 2520.11(f) was more applicable since the housing accommodation was owned or rented under government funding by an institution operated for charitable purposes on a nonprofit basis. But that provision required tenant to be "affiliated" with the institution to warrant exemption from rent stabilization. Since tenant was nonaffiliated with the HDFC, she wasn't exempt from rent stabilization. Nonprofit housing cooperatives are otherwise exempt from rent stabilization only if converted to HDFCs after 1973.

Tenant argued that there was a rent overcharge. The DHCR agreed and opened a rent overcharge proceeding to determine the legal rent.

Dickerson/Jackson-Bloom: DHCR Adm. Rev. Docket Nos. DX410001RO, DX410005RT (4/20/18) [9-pg. doc.]