I checked my rent history, and my apartment was listed as rent stabilized until 2008. The rent is now more than triple what it was the last time it was listed as stabilized. I think it might have been illegally deregulated. What do I do?
The only way a landlord can take an apartment out of rent stabilization is by legally getting the rent above a certain threshold, which as of January 1st, 2018 is $2,733.75, says Sam Himmelstein, a lawyer with the firm Himmelstein, McConnell, Gribben, Donoghue & Joseph LLP who represents residential and commercial tenants and tenant associations.
“The threshold for deregulation goes up by whatever the Rent Guidelines Board sets as the increase for a one-year lease on stabilized apartments,” Himmelstein explains.
In 2008, when your apartment seems to have been deregulated, the threshold was $2,000 a month, which means your landlord would have had to get the legal regulated rent over that amount to take it out of stabilization. It’s possible he accomplished that legally through vacancy increases—that is, rent hikes that the state Division of Housing and Community Renewal allow for new tenants—and Individual Apartment Improvements, rent increases proportional to the cost of documented, significant renovations to the apartment.
“A new floor, or a renovated kitchen or bathroom would qualify as an IAI, and then the vacancy increase typically hovers around 20 percent,” Himmelstein says. “What typically happens is that if the landlord can reach that magic threshold, then they can charge whatever they want.”
In 2008, the formula for IAIs was that landlords could raise the rent by 1/40th the cost of the improvements they had made. Note that simple repairs and upgrades, like repainting, sanding the floors, and fixing leaks would not qualify as IAIs.
“Let’s say in 2008, the prior stabilized tenant was paying $1,800 a month. The vacancy increase alone would have kicked them over the threshold,” Himmelstein says. “But if the prior tenant was only paying $800, the vacancy increase would bring the rent to $960, and the landlord would have had to put in at least $40,000 in improvements to get the apartment over the threshold.”
If you believe that the vacancy increases and IAIs would not have been sufficient for your landlord to deregulate the apartment, your first step should be to write him a letter asking him to show documentation in support of how he deregulated the apartment, which might include leases, contracts, and checks.
“The tenant should also try to research whether the building had a J-51 tax abatement. As long as that was in place when you moved into the apartment, even if it subsequently expired, the apartment should be stabilized,” Himmelstein says. You can check this by plugging your address into the HPD website to obtain your building’s block and lot number, and then putting that information into the city's J-51 Benefit History Request screener.
Another step you can take is to look up your building on the Department of Finance website and try to determine whether your landlord did make major improvements to the apartment.
“The landlord may not voluntarily turn over these documents, so you need to decide whether you want to sue them, file an overcharge complaint with the DHCR, or withhold rent and force them to sue,” Himmelstein says.
If you win a case against your landlord, your apartment would become re-stabilized and you would recover your rent overcharges, treble damages for the two most recent years of the overcharges if the landlord cannot establish that the overcharge was not willful, interest at the rate of 9 percent, and attorney’s fees. But taking on your landlord in housing court comes with risks.
“If the tenant challenges their landlord and loses, the landlord is not going to be very happy, and you may not find your lease renewed,” Himmelstein says. “That’s why it’s very important to talk to a lawyer first. They can offer an opinion about your chances, the various forums available to you, and the pros and cons of each of them.”
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Sam Himmelstein, Esq. represents NYC tenants and tenant associations in disputes over evictions, rent increases, rental conversions, rent stabilization law, lease buyouts, and many other issues. He is a partner at Himmelstein, McConnell, Gribben, Donoghue & Joseph in Manhattan. To submit a question for this column, click here. To ask about a legal consultation, email Sam or call (212) 349-3000.