Tenant's Rent-Stabilized Status Not Extended Under Addition of Affordable Units

Tenant moved into a 421-a building in 2003 and was subject to rent stabilization as a result. The building's 421-a tax benefits, along with tenant's rent stabilization status, were set to expire on June 30, 2018, as set forth in a 421-a rider attached to tenant's initial lease. Tenant later signed a rent-stabilized renewal lease for a two-year term between Jan. 1, 2018, and Dec. 31, 2019, and paid a preferential rent of $3,500 under that renewal. In October 2018, landlord started receiving "extended" tax abatement benefits under RPTL Section 421-a(17), which created a class of "extended affordability" properties that are entitled to certain extended tax benefits. In 2019, landlord offered and tenant executed an unregulated renewal lease for a one-year term commencing on Jan. 1, 2020, at $3,600 per month. Tenant then sued landlord, claiming that she was still rent stabilized. The court ruled for landlord in part, finding that tenant wasn't rent stabilized, although it denied landlord's request for attorney's fees since the action didn't arise from a lease default but rather sought a declaration of statutory rights and related relief. 

Tenant's initial lease and renewal leases each contained a 421-a rider with the required notice that the apartment was rent stabilized by virtue of the building's receipt of a 421-a exemption, due to expire on approximately June 30, 2018, after which the apartment would no longer be subject to rent regulation. Tenant pointed out that some of her renewal leases contained 421-a riders that misstated the tax benefit expiration date as June 30, 2019, and that therefore she couldn't be deregulated. But this minor misstatement as to the "approximate date" required to be set forth in the 421-a rider didn't render the rider invalid. Landlord was permitted to deregulate the apartment upon actual expiration of the tax benefits, pursuant to RPTL Section 421-a(2)(f). 

Tenant also argued that, despite the expiration of the initial tax benefits, landlord's receipt of extended tax benefits under RPTL Section 421-a(17) extended her rent stabilization status. RPTL Section 421-a(17) provides tax benefits for properties that had previously received 421-a benefits, in which at least 20 percent of the units were characterized as "affordable housing units" and an additional 5 percent of units were made "affordable." But, in such buildings, only the existing affordable housing units and the new affordable housing units must remain subject to rent stabilization. The remaining units, such as tenant's apartment, were not designated as "affordable," were not subject to extended rent stabilization, and therefore could be deregulated when the initial 421-a tax benefits expired. Landlord showed, and tenant didn't claim, that tenant's apartment was not a low-income or affordable housing unit. Landlord also had recorded a restrictive declaration of the building's affordable units, which didn't include tenant's apartment. 

Morrissey v. 400 West 59th Street Partners LLC: Index No. 152533/2020, 2021 NY Slip Op 32107(U)(Sup. Ct. NY; 10/29/21; Kelley, J)