Tenant Subject to Deregulation Inquiry After J-51 Benefits Expired

Landlord applied for high-rent/high-income deregulation of tenant's rent-stabilized apartment in 2013, since tenant's monthly rent was $2,500 or more. Landlord sought verification of whether tenant's household income in both 2011 and 2012 was more than $200,000. The DRA ruled against landlord, finding that tenant's apartment was rent stabilized due to receipt of J-51 tax benefits and tenant's leases didn't contain required notice provisions for automatic deregulation when the J-51 benefits expired.

Landlord appealed, and the case was reopened. Landlord pointed out that the building's J-51 tax benefits expired on June 30, 2011, and that the building was otherwise subject to rent stabilization, whether or not it had received J-51 benefits. The DHCR agreed. Landlord showed that the building had been subject to rent stabilization before it received J-51 tax benefits. So it didn't matter whether tenant received J-51 riders with his leases and tenant was subject to high-rent/high-income deregulation if his income exceeded the deregulation threshold. The case was sent back to the DRA for income verification.

Embassy House East LLC: DHCR Adm. Rev. Docket No. DS410026RO (8/10/18) [7-pg. doc.]