Luxury Deregulation After J-51 Benefits End

, New York Law Journal


In their Rent Regulation column, Warren Estis and Jeffrey Turkel of Rosenberg & Estis write: Although the rules for rent stabilized apartments are clear, it remains to be seen how other courts will view DHCR's ruling that high income deregulation is forever prohibited for rent controlled apartments where the building in question has received J-51 benefits.

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    The authors create a fiction of rent regulated "buildings" in order to make an argument that is contrary to the applicable statute and decisions. Neither Warren nor Schiffren were about rent stabilized buildings, they were about apartments. An entire building could be completely rent regulated or partially rent regulated or not rent regulated at all. Under RSL 26-504(c) if the apartment itself, not the building, was rent stabilized prior to receipt of J51 benefits, it reverts to rent stabilization status, with the possibility of luxury decontrol, after the expiration of the benefits. If, however, the apartment had been deregulated prior to receipt of the J51, and thereafter made subject to rent stabilization solely due to the J51, it cannot be luxury decontrolled upon expiration on the benefits. In addition, if it was unlawfully decontrolled while in receipt of J51 benefits, it cannot be luxury decontrolled upon expiration of the J51 benefits.

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