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Re: Luxury Decontrol

Posted by Lou on March 14, 1999 at 23:36:16:

In Reply to: Luxury Decontrol posted by Eric on March 12, 1999 at 19:25:58:

: Question: The rent laws say that upon a vacancy if the landlord charges $2000
: per month it is considered deregulated. The question is whether this is automatic
: or whether the landlord must file the proper paperwork to decontrol the apt.

: For instance, say you have a rent stabilized tenant, he or she moves out, and then
: the landlord bumps the rent to $2100 per month on the new tenant. This is done without
: any improvements or filings.

: The rent laws seem vague on this point.

I'm not an authority on the subject, but my understanding is that with both rent control and with rent stabilization, the landlord must file papers with DHCR for any increase.

However, read Mysterious et al: landlords cheat in very creative ways. There's a case here on TenantNet where the landlord went from under $2000 to luxury deregulation... and a good discussion by TenantNet.
Try searching there. Also: note that the 1993 and 1997 amendments to the RSC/RSL/EPTA/etc laws are separate here: to read a revised version in one piece you might have to go to the library.

Here's one to start you off: searched under 'decontrol' in HC Decisions, but note the keywords:

Case Caption:
Townan Realty Co. v. Posner
Issues/Legal Principles:
Landlord must file initial rent registration upon decontrol of premises, which tenant may
challenge, before apartment can be eligible to luxury deregulation exemption from
stabilization laws.
initial rent registration; fair market rent appeal; luxury deregulation
Civil Housing Court, New York County
Hon. Ruben Martino
September 9, 1998
NYLJ, page 22, col 4
Referred Statutes:
9 NYCRR 2521.2 & 2523.1
Tenant sought to dismiss the petition based on landlord's failure to file and serve an initial
rent registration form. The landlord claimed the form was not required because the rent of
this previously rent controlled apartment is over $2,000.00. The tenant leased an
apartment at a rental of $3,100 per month pursuant to a lease which stated that the owner
advised the tenant that because the rent was over $2,000, the apartment became
decontrolled upon becoming vacant after 1997, and was not subject to the rent stabilization
laws. The landlord allegedly made extensive renovations which brought the rent over
$2,000. The tenant withheld rent on grounds of overcharge which prompted the landlord's
nonpayment proceeding. The legal issue before the court was whether a landlord must file
an initial rent registration form with the DHCR and serve it on the tenant for a rent
controlled apartment which becomes vacant and immediately rents for more than $2,000
per month. Normally, the failure of a landlord to serve an initial rent registration form within
90 days after the apartment is decontrolled limits an owner to collection of the last
collectible rent under rent control. The court cited one case that a landlord is obliged to
follow this procedure even if the apartment is rented at over $2,000 a month (which would
take it out of the stabilized protective status). The reason this procedure is required is
because a tenant has the right to challenge the fair market rent before a unit is deregulated
and only after the initial rent set by the landlord survives a challenge by the first tenant or
remains unchallenged for more than 90 days does the apartment then become formally
The landlord argues that the new Rent Regulation Reform Act of 1997 excludes from rent
stabilization laws any apartment which is or becomes vacant after the effective date of the
law where the legal regulated rent is $2,000 per month or more. The court noted that the
Rent Stabilization Code's initial registration requirement only applies to apartments which
become subject to rent stabilization after the vacancy. If the deregulation in the new law is
automatic, then the apartment is not subject to any regulation and no registration is
required. The court held that in this case where the apartment was formerly rent controlled,
the process is not automatic. This is because the high rent exclusion applies to apartments
which have a legal regulated rent of at least $2,000. When an apartment leaves rent
control because of a vacancy the legal regulated rent for the apartment is determined
through the fair market rent appeal procedures which require the filing of an initial rent
registration. The court noted that the current high rent exclusion statute still contains the
qualifying language that the legal regulated rent must be over $2,000 to qualify for
deregulation. In this case the prior rent controlled rent was under $2,000 and was
increased to over $2,000 due to improvements, according to the landlord. However, the
new $3,100 rent is not yet the legal regulated rent according to the court because the
tenant is allowed by law the right to contest the validity of the amount set by the landlord
(through a fair market rent appeal). The court held that the filing of an initial registration is
the only mechanism under the Rent Stabilization Code for establishing a new legal
regulated rent for a previously rent controlled apartment. The court held unless there is a
legal regulated rent of over $2,000, the deregulation statute, by its own terms, does not
automatically apply.

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