Tenants in Building Receiving J-51 Tax Benefits Not Subject to Deregulation

Landlord applied for high-rent/high-income deregulation of tenants' rent-stabilized apartment in 2005. The DRA ruled for landlord since tenants' rent was more than $2,000 per month and their household income exceeded $175,000 in both 2003 and 2004. Tenants appealed and won. The building initially became rent-stabilized under the 421-a tax benefit program. Tenants moved into the apartment in 1987 and the 421-a benefits expired in June 1987. Tenants' leases didn't contain a lease rider advising them that their apartment was subject to deregulation upon expiration of the 421-a benefits, so they remained rent stabilized. When the building converted to a co-op in 1982, tenants remained rent stabilized. Landlord later applied for J-51 tax benefits, which went into effect on July 1, 2005. The exception to rent stabilization coverage for co-op buildings under J-51 didn't apply here because tenant's apartment was already rent stabilized before the building went co-op or received J-51 benefits. Tenants cannot be deregulated because the building was receiving J-51 tax benefits at the relevant time period. 

Zucker: DHCR Adm. Rev. Docket No. ES410004RP (5/16/18) [10-pg. doc.]