Fact
Sheet #36 - High-Rent Vacancy Decontrol and High-Rent High-income Decontrol
[Note:
This fact sheet is currently under revision by DHCR. The information below
is from a previously issued
version of this fact sheet and may not accurately
state DHCR's current policy. To see whether DHCR has reissued this fact
sheet, go to their website.]
Deregulation of a high-rent apartment may occur as follows:
A. High-Rent Vacancy Decontrol
If an apartment is vacated with a legal regulated rent (Rent
Stabilization) or maximum rent (Rent
Control) of $2,000 or more per month, such apartment qualifies for
permanent decontrol, and therefore for removal from all rent
regulation.
This Fact Sheet describes current practice. Vacancies in high-rent apartments
between 1993 and 1997 may also have resulted in permanent decontrol. Further
information about this topic is available from DHCR, as explained at the
end of this Fact Sheet.
Specific Situations Relating to High-Rent Vacancy Decontrol
With regard to rent stabilized apartments, where an owner installs new equipment
or makes improvements to the individual apartment qualifying for an individual
apartment improvement rent increase, while such apartment is vacant, and
the legal regulated rent is raised on the basis of such rent increase, or
as a result of any rent increase permitted upon vacancy or succession, or
by a combination of rent increases, as applicable, to a level of $2,000 or
more per month, whether or not the next tenant in occupancy actually is charged
or pays $2,000 or more per month, such apartment will qualify for decontrol.
An
apartment also qualifies for decontrol if, while it is vacant, the owner
substantially alters its outer dimensions, creating a "new" apartment and
the rent paid by the first tenant after the alteration is $2,000 or more
per month. An apartment will also qualify for decontrol upon vacancy by the
tenant, where a preferential rent of less than $2,000 per month is charged
and paid and a higher legal regulated rent has been established.
Exceptions to Vacancy Decontrol
Apartments
that are subject to rent regulation only because of the receipt by the
owner of tax benefits pursuant to Sections 421-a or 489 of the Real
Property Tax Law, or pursuant to Sections 11-243 (formerly J51-2.5) or 11-244
(formerly J51-5) of the New York City Administrative Code, or only because
of Article 7-C of the Multiple Dwelling Law (commonly referred to as the "Loft
Law"), do not qualify for high-rent vacancy decontrol.
High-rent vacancy decontrol does not apply to apartments for which DHCR
determines that the owner, or any person acting on such owner's behalf, with
intent to cause the tenant to vacate, engaged in any course of conduct (including,
but not limited to, interruption or discontinuance of required services)
which interfered with or disturbed or was intended to interfere with or disturb
the comfort, repose, peace or quiet of the tenant in his or her use or occupancy
of the apartment.
High-rent vacancy decontrol will also not result where the vacancy occurs
during the period of effectiveness of a rent-reduction order issued as a
result of a finding that an owner failed to maintain required or essential
services, that lowers the legal regulated or maximum rent below $2,000 per
month.
Where
the tenant of record dies or otherwise permanently vacates the apartment,
and the tenant's family member, whether "traditional" or "nontraditional",
is entitled to be named on a renewal lease [for rent control, has the right
to continue in occupancy as a statutory tenant] through "succession," the
housing accommodation will not be considered as having become vacant for
the purposes of high-rent vacancy decontrol.
B. High-Rent/High-income Decontrol
Upon the issuance of an order by the DHCR, including orders resulting from
default (e.g., failure to answer notices from DHCR), apartments which have
a legal regulated or maximum rent of $2,000 or more per month and which are
occupied by persons whose total annual federal adjusted gross incomes, as
reported on their New York State Income Tax returns, have been in excess
of $175,000 for each of the two preceding calendar years, may be permanently
decontrolled under the procedures set forth below. The standards for determining
whether the $2,000 rent threshold has been met are essentially the same as
those for high-rent vacancy decontrol stated above.
To be eligible for High-Rent/High-Income Decontrol, the legal regulated
or maximum rent must have continuously been $2,000 or more per month from
the time of the owner's service of the income certification form upon the
tenant (see discussion below) to the issuance of an order deregulating the
subject apartment.
Procedures
for High-Rent High-Income Decontrol
"Annual income" means the federal adjusted gross income as reported on the
New York State Income Tax return, and "total annual income" as the sum of
the annual incomes of all persons who occupy the apartment as their primary
residence on other than a temporary basis. The annual incomes of bona fide
employees of such occupants, as well as the annual incomes of bona fide subtenants
are not included. However, even where an apartment is sublet, the annual
income of the prime tenant will be considered. Where the tenant on the lease
is a corporation, the annual income of the corporation is not considered
in determining whether the threshold total annual income level has been
met.
On
or before May 1 of each year, the owner of any rent regulated apartment
having a legal regulated or maximum rent of $2,000 or more per month may
serve the tenant(s) residing therein with an Income Certification Form (ICF)
as prescribed by the DHCR, on which such tenant(s) must identify the individuals
referred to in the preceding paragraph (and provide such other information
as the form requires, including information relating to occupants who may
have recently vacated). The tenant(s) must certify whether the household's
total annual income was in excess of $175,000 in each of the two preceding
calender years. The ICF does not require disclosure of any income information
other than whether the threshold for each of the two preceding years has
been met. The ICF must also informing the tenant(s) of the protections against
harassment, that disclosure of income information is limited to the manner
required by the ICF, and that only the tenants of apartments having a $2,000
rent level as described above may be served with and asked to complete an
ICF. Where the monthly legal regulated or maximum rent is less than $2,000,
an owner is not authorized to serve an ICF. In all cases, the operative date
for determining the nature of any person's status or occupancy is the date
on which the ICF is served.
The owner must serve the ICF by at least one of the following methods: personal
delivery, certified mail or regular first class mail, and must also obtain
and retain proofs of service. With regard to personal service, such proof
would be a copy of the ICF signed (not initialed) and dated by the tenant
acknowledging receipt; with regard to certified mail, it would be a U.S.
Postal Service receipt stamped by the U.S. Postal Service; and with regard
to regular first class mail, it would be a U.S. Postal Service Certificate
of Mailing stamped by the U.S. Postal Service. The tenant(s) must return
the ICF to the owner within 30 days after service.
If
the tenant(s) returns the IFC and the "total annual income," as certified,
exceeded the threshold amount for each of the two preceding years, the owner
may, no later than June 30, file an Owner's Petition for Decontrol (OPD)
with DHCR, and an order will be issued within 30 days providing that the
apartment will no longer be subject to rent regulation upon expiration of
the existing lease (rent stabilized apartment), or as of June 1 in the year
next succeeding the filing of the OPD (rent controlled apartment).
However,
in the event the tenant(s) fails to return the ICF within 30 days of service,
or the owner disputes it, such owner may, no later than June
30, file an OPD with DHCR requesting DHCR to verify the "total annual income" of
the occupants of the subject apartment with the New York State Department
of Taxation and Finance (DTF). Within 20 days after the OPD is filed, DHCR
will notify the subject tenant(s) named on the lease that they must provide
any information DHCR and DTF require to verify whether the total annual income
exceeded the applicable threshold amount for each of the two preceding calendar
years. The notice will also state that a failure to do so within 60 days
may result in an order being issued decontrolling the apartment. In this
situation, the tenant(s) may be required to submit a photocopy of either
the preprinted mailing labels used on the New York State State Income Tax
returns for the applicable years, or the first page of the New York State
Income Tax returns for the applicable years, for each tenant or occupant
whose income is to be included in "total annual income," or in the event
neither is available, a written explanation indicating why Income Tax returns
were not filed for the applicable years.
Tenant(s) should delete all social security numbers and income figures from
all copies of preprinted mailing labels or tax returns submitted. The name
and address of any tenant or occupant who didn't file a New York State State
Income Tax return for any applicable year must be supplied on a form prescribed
by the DHCR, as they would have appeared had that tenant or occupant filed
the return.
If DTF notifies DHCR that it has determined that the total annual income
was in excess of the threshold amount for each of the two preceding years,
DHCR will, no later than November 15, notify the owner and tenants of the
results of such determination, after which all parties will have 30 days
to comment. Where appropriate, within 45 days after the expiration of the
comment period, DHCR will issue an order providing that the apartment will
no longer be subject to rent regulation upon expiration of the existing lease
(for rent stabilized apartments), or as of March 1 in the year next succeeding
the filing of the OPD (for rent controlled apartments).
Where the DTF determines that the income threshold has not been met or cannot
ascertain whether the threshold been met, DHCR will deny the OPD.
Subsequent Occupancy
A high rent apartment, which becomes deregulated on the basis of high income,
remains deregulated, notwithstanding subsequent occupancy by a household
whose total annual income would not have qualified for high income deregulation,
or if the legal regulated monthly rent falls below $2,000.
Exceptions to High-Rent/ High-Income Decontrol
Apartments
do not qualify for high-rent/high-income deregulation where they are subject
to rent regulation only because of the receipt by the owner of
tax benefits pursuant to Sections 421-a, or 489 of the Real Property Tax
Law, or pursuant to Sections 11-243 (formerly J51- 2.5) or 11-244 (formerly
J51-5) of the New York City Administrative Code, or only because of Article
7-C of the Multiple Dwelling Law (commonly referred to as the "Loft Law").
However, an apartment originally subject to rent regulation only because
of the owner's receipt of tax benefits pursuant to Section 421-a of the Real
Property Tax Law may qualify for high-rent/high-income deregulation after
the tax benefits expire even when it would otherwise have remained rent
regulated until the tenant vacated the apartment.
Lease Renewal
Where
the "window period" during
which an owner must offer a renewal lease has not expired, an owner who
has filed an OPD with DHCR which is still pending,
is permitted to attach a rider to the offered renewal lease, on a form prescribed
or a facsimile of such form approved by the DHCR, containing a clause notifying
the tenant that the offered renewal lease, if accepted, will nevertheless
no longer be in effect after 60 days from the issuance by the DHCR of an
order of decontrol. The rider may also state that in the event that a petition
for administrative review (PAR) is filed against such order of decontrol,
the renewal lease will terminate after 60 days from the issuance by the DHCR
of an order dismissing or denying the PAR.
Privacy
The
only information required to be exchanged and subject to consideration
in the process of income verification among the owner, tenant, DHCR and
DTF is whether the income threshold for each of the two preceding years
has been met. Specific income figures will not be disclosed or exchanged.
The provisions of the State Freedom of Information Law ("FOIL") which might
otherwise allow certain information to be disclosed, do not apply to such
income information obtained by DHCR.
For
more information or assistance, call the DHCR Rent InfoLine (718-739-6400)
or visit your Borough or County Rent Office.
DHCR
Version 12/16/04
RGB page updated 8/6/09
