Tenant's Apartment Not Subject to Deregulation When J-51 Tax Benefits Expired

Landlord sued tenant in State Supreme Court after sending tenant a termination notice before her one-year lease ended. Landlord claimed that tenant failed to vacate the apartment and sought to recover damages for breach of lease, possession, use and occupancy, ongoing damages, legal fees, and expenses. Landlord also sought a declaration that the apartment wasn't rent stabilized. Tenant in response claimed that she was rent stabilized and entitled to a renewal lease. Tenant asked the court to dismiss the case without trial.

The court ruled for tenant. A prior rent-controlled tenant occupied the unit when landlord began receiving J-51 tax benefits for the building. That tenant died in August 1998. At that point, the apartment became subject to rent stabilization, regardless of whether landlord received J-51 tax benefits. Here, the J-51 benefits didn't expire until June 30, 2019. The apartment would have become subject to deregulation at that point, except that HSTPA had abolished vacancy deregulation effective June 14, 2019. Landlord argued incorrectly that the apartment became deregulated automatically under RSL Section 26-504(c), which wasn't revoked by the HSTPA amendments. The court pointed out that a building like this one, that is already regulated when it received J-51 benefits, will continue to be regulated under the original rent regulation scheme when the tax benefits expire. And landlord's interpretation of the law had recently been rejected by another court in the separate case of Stuyvesant Town-Peter Cooper Vil. Tenants Ass'n v. BPP ST Owner LLC (LVT #32436). The apartment was rent stabilized, and the case was dismissed.

Michael Minick LLC v. Jones: Index No. 157032/2022, 2023 NY Slip Op 33471(U)(Sup. Ct. NY; 10/5/23; Frank, J)