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Re: 55% rent increase: new J51 case

Posted by Karen on January 20, 2001 at 16:54:59:

In Reply to: 55% rent increase posted by Bill Marsilii on January 14, 2001 at 06:31:28:

Case Caption: Haberman v. Wright

Issues/Legal Principles:
Apartments subject to rent control due to J-51 tax exemption/abatement from 1974 remain controlled due to landlord's failure to notify of termination of regulation as required by 1985 amendment

Court: Civil Housing Court, New York County

Judge: Hon. Weissberg

Date: January 2, 2001

Citation: NYLJ, page 29, col 6

Referred Statutes: 9 NYCRR 2200.2(e)(3); Real Property Tax Law 489(7)(b)(2); RCNY, tit. 10, 5- 03(f)(3)(1)


The landlord brought an action seeking a declaratory judgment that the rent control status of four cooperative apartments which he owned had terminated, based upon the expiration of J- 51 tax abatement benefits.

The four units were allegedly vacant from 1969 through 1972, when the owner claimed the building was completely renovated from a class "B" single room hotel into a class "A" building with 89 units. When renovation was completed, the owner applied for a real estate tax exemption and abatement pursuant to section J.51-2.5 of the Administrative Code of the City of New York, which was granted in 1974. At that time, the J-51 program required that all residential units be rent controlled for the duration of the exemption/abatement. Thereafter, the building was converted to cooperative ownership under a noneviction plan, and the owner became shareholder and proprietary lessee of the four units. The tenants continued to reside in the four units under rent control. As of June 30, 1986, the building no longer received benefits from the J-51 tax program.

Twelve years later, the owner sought to have the four units decontrolled. However, in 1985 a statute was enacted which provided that a unit previously subject to rent regulation as a result of a J-51 tax abatement and/or exemption would continue to be subject to such regulation until the first vacancy of the unit after the benefits ended, unless the tenant had received notice in the initial lease and the subsequent renewal leases that rent regulation of the unit would terminate upon expiration of the J-51 benefits.

When the owner moved for summary judgment, the Court refused to decontrol the units, as the owner failed to prove that the tenants were notified that regulation of their J-51 units would expire. Instead the Court granted the tenants' cross-motions for summary judgment, and declared that the four units would be rent controlled until there were vacant. The Court rejected the owner's argument that he was denied equal protection of the law, or that the owner's reliance on the representations made to him in the law as it existed in 1974 excused him from the effects of the 1985 amendments.


Rent Control Status of Apartments Does Not Terminate With Expiration of J-51 Benefits
PLAINTIFF SOUGHT a declaration that the rent control status of four cooperative apartments, in which he owned, was terminated upon the expiration of J-51 tax abatement benefits. Plaintiff argued that because his building was empty between 1969 and 1972, he was entitled to the total deregulation of the four apartments once the buildings J-51 benefits ended. The court noted that in 1985, a statute was enacted which provided that any dwelling unit that was previously subjected to "rent regulation," as a result of receiving a J-51 tax abatement, would be subject to such regulation until the first vacancy of the unit after the benefits ended, unless the tenant received notice that the regulation of the unit would terminate upon expiration of the J-51 benefits. The court found that neither of these situations existed and denied plaintiff's motion for summary judgment.
Haberman v. Wright, New York, Supreme Court, Part 62, Justice Weissberg. QDS:22703715.

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