Tenant Was Rent Controlled, Not Rent Stabilized, Under PHFL Mortgage

In November 2016, tenant filed an application with the DHCR seeking an administrative ruling to determine his apartment's regulatory status. Earlier that year, landlord had sued to evict tenant in housing court, claiming that tenant was rent controlled. Tenant claimed that he was instead rent stabilized because he moved into the unit in 1980 following the vacancy by another tenant he didn't know. The tenant also claimed rent overcharge. Landlord pointed out that the DHCR had approved Maximum Base Rent (MBR) rent increases for the apartment in 2012, 2014, and 2016. The DRA ruled for tenant, finding that the apartment was rent stabilized. Landlord appealed and lost, then filed an Article 78 court appeal of the DHCR's PAR ruling. The case was sent back to the DHCR for reconsideration.

The DHCR then ruled for landlord. Landlord showed that the building and its apartments were excluded from rent stabilization coverage under a 1969 mortgage agreement that stated that the during the 30-year mortgage period rent control regulations would remain in effect regardless of change in occupancy. The mortgage agreement also referred to Article VIII of the Private Housing Finance Law Sections 404 and 405, which required that all renters including new renters be subject to rent control. The mortgage had been secured with the City of New York for the purpose of rehabilitating the building. When the complaining tenant moved into the building in 1980, the mortgage was in full force and effect. So the tenant was subject to rent control, and his rent had been set by the DHCR in accordance with MBR orders.

Crown Heights Assoc.: DHCR Adm. Rev. Docket No. LQ210005RP (8/17/23)[3-pg. document]