Was Vacancy Deregulation of Tenant's Apartment Lawful?

Tenants sued landlord, claiming rent overcharge and improper deregulation of a rent-stabilized apartment in 2008 after the prior rent-controlled tenant moved out. The court denied landlord's request for a ruling without trial that tenants' apartment wasn't rent stabilized.

Landlord appealed and lost. Although no fair market rent appeal was timely filed with the DHCR within the four years after vacancy decontrol, it was well settled that a tenant may challenge the claimed deregulated status of a dwelling at any time during their tenancy. And there were triable issues of fact as to whether the claimed high-rent destabilization of the apartment was legal and legitimate. The first lease issued after vacancy decontrol provided for a monthly rent of $2,125, which was above the $2,000 deregulation threshold then in effect. But when that tenant moved out a year later, landlord rented the apartment under two subsequent leases at $1,700 per month, which was below the deregulation threshold. Landlord also never registered the first tenant's rent with the DHCR. And landlord paid the rent-controlled tenant $20,000 to move out in 2008, indicating an intent to deregulate the unit.

Malkiewicz v. Acquisition Am. XI LLC: Index No. 156163/22, App. No. 3323, Case No. 2024-01754, 2024 NY Slip Op 06542 (App. Div. 1 Dept.; 12/24/24; Kern, JP, Singh, Gesmer, Pitt-Burke, Oneill Levy, JJ)