Tenant's Default in Response to 2014 Luxury Deregulation Application Vacated

Landlord applied to the DHCR for high-rent/high-income deregulation of tenant's rent-stabilized apartment in 2014. Landlord pointed out that tenant failed to respond to the Income Certification Form (ICF) that landlord sent tenant earlier that year. In 2018, the DRA sent tenant a copy of landlord's application and asked for a response. The tenant didn't answer the DRA's notice. In February 2019, the DRA issued an Order of Deregulation based on tenant's default.

Tenant appealed, and the DHCR ruled for tenant in July 2020. The DHCR found that tenant's failure to participate in the DRA's proceeding was excused. Since HSTPA had prospectively done away with luxury deregulation effective June 14, 2019, the DHCR was now barred from processing landlord's 2014 "LD" application on the merits. Landlord then filed an Article 78 court appeal, claiming that the DHCR's decision was arbitrary and unreasonable.

The court ruled for landlord in part. The court found that the DHCR's decision to excuse tenant's default was reasonable but that the DHCR had to rule on the merits of landlord's 2014 deregulation application. On remand, the DHCR ruled for tenant. Tenant showed that during 2012 and 2013, her annual household income was below the $200,000 high-rent threshold. So she wasn't subject to deregulation in response to landlord's 2014 application. And, despite the unique circumstances of this case, nothing altered the application of HSTPA's repeal of high-rent/high-income deregulation effective June 14, 2019.

Elkin: DHCR Adm. Rev. Docket No. KO410005RP (5/31/22)[4-pg. document]