“If you move into an apartment that the landlord is claiming is not stabilized, but the prior tenant was stabilized and moved out after the enactment of HSTPA, that’s almost definitely going to be an illegal deregulation,” attorney Sam Himmelstein says.

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Question:

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?

Answer:

Prior to the passage of rent reform legislation in 2019, a landlord could take an apartment out of rent stabilization by legally getting the rent above a certain threshold, known as high rent vacancy deregulation, says Sam Himmelstein,  a lawyer at Himmelstein, McConnell, Gribben & Joseph, who represents residential and commercial tenants and tenant associations. 

Before the enactment of the Housing Stability and Protection Act (HSTPA), landlords could lawfully de-regulate an apartment when a tenant vacated and the rent exceeded a certain threshold. That threshold was $2,000 a month until 2011, when it was raised to $2,500. In 2015 it was increased to $2,700. 

In 2008, when your apartment seems to have been deregulated, your landlord would have had to get the legal regulated rent over $2,000 to take it out of stabilization. It’s possible he accomplished that legally through vacancy increases, which are rent hikes that the state Division of Housing and Community Renewal allowed for new tenants—and Individual Apartment Improvements, rent increases proportional to the cost of documented, significant renovations to the apartment. (These increases are no longer allowed under HSTPA.)

“A new floor, or a renovated kitchen or bathroom would have qualified as an IAI [an improvement, equipment installation, or increase in service], and then the vacancy increase hovered around 20 percent,” Himmelstein says. “What typically happened is that if the landlord could reach that magic threshold, then they could 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.”

Additionally, if a tenant renewed their lease and their rent exceeded the threshold, and their annual household income was above $200,000 for two consecutive years, this was also grounds for de-regulation.

But as of June 14th, 2019, with enactment of HSTPA, both these forms of de-regulation were abolished. This does not apply retroactively, however, so any apartment lawfully deregulated prior to HSTPA should remain deregulated now.

“If you move into an apartment that the landlord is claiming is not stabilized, but the prior tenant was stabilized and moved out after the enactment of HSTPA, that’s almost definitely going to be an illegal deregulation,” Himmelstein says. “Now apartments stay rent-stabilized when they become vacant, and there are very minimal rent increases allowed.”

And today, under the new legislation, landlords who make IAIs can only pass on a small portion of the expenses to tenants: A maximum of 1/164th or 1/180th of up to $15,000 in renovation costs, depending on the size of the building. This works out to a maximum rent increase of $89 per month.

If you believe that 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 and Department of Buildings websites 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, withhold rent and force them to sue, or sue them in state Supreme Court,” Himmelstein says.

If you win a case against your landlord, your apartment would become re-stabilized and you would recover your rent overcharges. You would also recover treble damages for the five most recent years of the overcharges if the landlord cannot establish that the overcharge was not willful, and interest at the rate of 9 percent on the portion of the damages outside the five-year period. (HSTPA provides for treble damages for a maximum of six years, with the retroactive recovery period dating back to two years before HSTPA was passed in 2019. This means that tenants can recover damages dating back to 2017—five years’ worth as of today.)

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.”

Related

Ask Sam: How do I find out if my apartment should be rent-stabilized--and the landlord owes me money? (sponsored)

Ask Sam: I found out my apartment used to be rent-stabilized. Now what? (sponsored)

Ask Sam: My landlord claims I'm not rent-stabilized because a J-51 subsidy expired before I moved in. Is this true? (sponsored)

Ask Sam: What's a "Major Capital Improvement," and does it really mean my landlord can raise the rent? (sponsored)

Read all our Ask a Renters Rights Lawyer columns here.


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 & 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.

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