Tenant Subject to Deregulation After J-51 Benefits Ended

Landlord applied for high-rent/high-income deregulation of tenant's apartment in 2008. Tenant opposed landlord's application, but the DRA ruled for landlord after DTF records confirmed that tenant's household income exceeded $175,000 in both 2006 and 2007. Tenant appealed, claiming that she wasn't properly served with the prerequisite Income Certification Form (ICF). She also claimed that the building received J-51 tax benefits and therefore was ineligible for high-rent/high-income deregulation even though the apartment was already subject to rent stabilization before landlord received the J-51 benefits. The DHCR ruled against tenant. Landlord submitted with its application proof of timely mailing of the ICF to tenant at the apartment. Tenant also had a full and fair opportunity to answer landlord's deregulation application. In addition, the high-income rent deregulation exemption from rent stabilization doesn't apply to apartments that became or become subject to rent stabilization solely by virtue of receipt of J-51 tax benefits. High-rent/high-income deregulation isn't available for apartments receiving J-51 tax benefits while such benefits remain in effect, whether or not the apartment was otherwise subject to rent stabilization before receipt of those benefits. But upon expiration of the J-51 benefits, if the building was subject to rent stabilization solely as a result of the J-51 benefits, the apartment remains subject to regulation until either tenant vacates or the lease in effect when the benefits end expires, provided that each lease to tenant contained a notice rider of the projected J-51 expiration date. But if the apartment was previously subject to rent stabilization, it becomes subject to high-rent/high-income deregulation when the J-51 benefits end. In this case, the J-51 benefits expired before landlord sent the ICF to tenant and the building was subject to rent stabilization prior to receipt of the J-51 benefits. Therefore, under Rent Stabilization Law 26-504(c), it didn't matter that tenant didn't receive J-51 benefit expiration notice riders with her leases. So tenant wasn't exempt from deregulation.

Collins: DHCR Adm. Rev. Docket No. ZD410037RT (5/17/12) [8-pg. doc.]