Posted by A Tenant on August 17, 2000 at 17:54:19:
I think many people may have the misconception that expiration of J-51 tax benefits means that the building in question automatically becomes exempt from rent stabilization, as long as tenants are properly notified in their leases.
This is not the case. If a building was rent-stabilized before the tax benefits, it is still rent-stabilized afterward.
The landlord can claim an exemption from rent regulation if the renovation work for which the tax benefits were received constituted substantial rehabilitation. This is not automatic, however. Even under DHCR's currently proposed evisceration of the rent stabilization code, the landlord has to satisfy some fairly rigorous requirements. These are designed to assure that the work truly added to the city's housing stock, rather than being a pretext to evade rent regulation.
Under guidelines spelled out in a 1995 DHCR bulletin on substantial rehabilitation (link below), the owner must show that:
-- 75 % of building wide and individual apartment systems have been totally replaced.
-- the building was severely deteriorated before the work, with 80 % of apartments vacant.
-- the work complied with building law, including obtaining an amended certificate of occupancy.
-- the owner cannot have been convicted of arson or other harassment to force tenants to vacate.
I'm not a lawyer, but have recently been through a trial on these issues (no ruling yet). I would advise the tenant who is trying to decide whether to sign a lease after a J-51 expiration to go ahead and sign, and start looking into whether the building was stabilized before the tax exemption, what work was performed, if there has ever been a DHCR harassment order or criminal conviction and whether am amended c of o was obtained. If it looks as if there are no grounds for the landlord's claim of substantial rehabilitation, you might want to get the other tenants together, hire a lawyer and seek to recover the rent overcharge, trebled. It won't matter that you signed the lease renewal.
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