A PRIMER ON THE NEW YORK STATE DIVISION OF HOUSING & COMMUNITY RENEWAL: FORMS, FILINGS AND POLICY UPDATES

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1 NYCLA CLE I NSTITUTE A PRIMER ON THE NEW YORK STATE DIVISION OF HOUSING & COMMUNITY RENEWAL: FORMS, FILINGS AND POLICY UPDATES Prepared in connection with a Continuing Legal Education course presented at New York County Lawyers Association, 14 Vesey Street, New York, NY scheduled for Tuesday, December 9, 2014 Program Co-Sponsor: Faculty: Magda Cruz, Belkin Burden Wenig & Goldman Jamie Heiberger, Heiberger & Associates Josh Losardo, Belkin Burden Wenig & Goldman Jim Marino, Kucker and Bruh Niles Welikson, Horing Welikson & Rosen This course has been approved in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 3 Transitional and Non-Transitional credit hours; 2 Skills; 1 Professional Practice/Law Practice Management. This program has been approved by the Board of Continuing Legal education of the Supreme Court of New Jersey for hours of total 3 CLE credits. Of these, 0 qualify as hours of credit for ethics/professionalism, and 0 qualify as hours of credit toward certification in civil trial law, criminal law, workers compensation law and/or matrimonial law. ACCREDITED PROVIDER STATUS: NYCLA s CLE Institute is currently certified as an Accredited Provider of continuing legal education in the States of New York and New Jersey.

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3 Information Regarding CLE Credits and Certification A Primer on the New York State Homes & Community Renewal and the Division of Housing & Community Renewal: Forms, Filings and Policy Updates December 9, 2014; 9:00 AM to 12:00 PM The New York State CLE Board Regulations require all accredited CLE providers to provide documentation that CLE course attendees are, in fact, present during the course. Please review the following NYCLA rules for MCLE credit allocation and certificate distribution. i. You must sign-in and note the time of arrival to receive your course materials and receive MCLE credit. The time will be verified by the Program Assistant. ii. iii. iv. You will receive your MCLE certificate as you exit the room at the end of the course. The certificates will bear your name and will be arranged in alphabetical order on the tables directly outside the auditorium. If you arrive after the course has begun, you must sign-in and note the time of your arrival. The time will be verified by the Program Assistant. If it has been determined that you will still receive educational value by attending a portion of the program, you will receive a pro-rated CLE certificate. Please note: We can only certify MCLE credit for the actual time you are in attendance. If you leave before the end of the course, you must sign-out and enter the time you are leaving. The time will be verified by the Program Assistant. Again, if it has been determined that you received educational value from attending a portion of the program, your CLE credits will be pro-rated and the certificate will be mailed to you within one week. v. If you leave early and do not sign out, we will assume that you left at the midpoint of the course. If it has been determined that you received educational value from the portion of the program you attended, we will pro-rate the credits accordingly, unless you can provide verification of course completion. Your certificate will be mailed to you within one week. Thank you for choosing NYCLA as your CLE provider!

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5 Primer on New York State Division of Housing and Community Renewal: Forms, Filings, and Policy Updates New York County Lawyers Association, CLE Institute 14 Vesey St., New York NY December 9, 2014, 9:00 AM 12:00 PM Program Co-sponsor: Community Housing Improvement Program, Inc. Speakers Magda Cruz, Belkin Burden Wenig & Goldman Jamie Heiberger, Heiberger & Associates Josh Losardo, Belkin Burden Wenig & Goldman Jim Marino, Kucker and Bruh Niles Welikson, Horing Welikson & Rosen 9:00 AM 9:10 AM Introductory Remarks Bari Chase, NYCLA Patrick Siconolfi, Executive Director, CHIP 9:10 AM 9:40 AM Leasing Practices Jamie Heiberger, Heiberger & Associates 9:40 AM 9:55 AM Preferential Rents Jim Marino, Kucker and Bruh 9:55 AM 10:15 AM Legal Rent Calculations Jim Marino, Kucker and Bruh 10:15 AM 10:30 AM Amending Registrations Magda Cruz, Belkin Burden Wenig & Goldman 10:30 AM 10:45 AM BREAK 10:45 AM 11:00 AM TPU Investigations and Treble Damages Josh Losardo, Belkin Burden Wenig & Goldman 11:00 AM 11:15 AM The Four Year Rule Niles Welikson, Horing Welikson & Rosen 11:15 AM 11:35 AM Use of the Default Formula Niles Welikson, Horing Welikson & Rosen 11:35 AM 11:45 AM Legal Challenges to the RSC and TPU Magda Cruz, Belkin Burden Wenig & Goldman 11:45 12:00 PM Q & A Panel CHIP s participation in this seminar was made possible by a grant from Capital One

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47 Table of Contents Niles C. Welikson, Esq., Horing Welikson & Rosen, P.C. RSC Amendments Matter of Grimm Court of Appeals Decision Cintron V. Colagero Court of Appeals Decision Matter of Boyd 2013 Decision (Appellate Division). Matter of Boyd 2014 Decision (Court of Appeals). 72A Realty v. Lucas Appellate Division Decision. JRD v. Eimicke Lavanant v. DHCR 590 W. End Assoc. v. DHCR

48 RSC Amendment Summary 9 NYCRR paragraphs (o) and (p) are re-lettered (p) and (q) and a new paragraph (o) is added to designate the Tenant Protection Unit (TPU) as a distinct unit under DHCR 9 NYCRR new paragraph (u) is added to provide that an owner will be required to provide the first tenant of a deregulated unit an exit notice explaining how the unit became deregulated, how the rent was computed and what the last regulated rent was. A copy of the rent registration indicating deregulated rent must be provided to the tenant. 9 NYCRR is amended to add a new subdivision (l) to establish the criteria for setting the initial legal regulated rent for housing accommodations located in properties that were or continue to be owned by housing development fund companies (HDFC). 9 NYCRR (b) is amended, 9 NYCRR (b)(2) is repealed, and 9 NYCRR (c) amended to provide that where a preferential rent is charged, the legal rent can only be preserved by disclosure in a tenant s lease; a rent registration indicating a preferential rent will not be dispositive. The owner shall be required to maintain and submit where required by DHCR the rental history immediately preceding a preferential rent to the present which may be prior to the four year period preceding the filing of a complaint. 9 NYCRR (a)(3)(22) is amended to provide there will be no MCI rent increases for conversions from master to individual metering; however, electrical wiring for the building can be subject to an MCI rent increase. 9 NYCRR (a)(13) is amended to provide that when an MCI rent increase application is received, DHCR will initiate its own search to determine if there is an immediately hazardous violation in a building and, if there is such a violation, the application will be rejected with leave to renew once the violation is remedied. 9 NYCRR (d)(3)(iii) is amended to provide that a tenant receiving DRIE (disabled) benefits will not be subject to electrical sub-metering conversions; this conforms to how SCRIE (senior citizens) tenants are treated. 9 NYCRR (c)(1) and 9 NYCRR (c)(3) are amended to provide the following: Required lease riders attached to leases will have greater detail as to how the rent was calculated, including details about how any IAI rent increase was calculated; tenants will be able to request documentation from owners to 1

49 support an IAI increase; if the lease rider and/or any requested IAI documents are not provided, there can be no rent increase until the rider/documentation is provided unless the owner can prove the rent charged is otherwise legal; if the rent charged is above the legal rent during period when rider/documentation is not provided, there can be a rent overcharge proceeding and no rent increase can be collected until the rider/documentation is provided. 9 NYCRR (b) is amended and 9 NYCRR (g) is re-lettered (h) and new subdivision (g) is added to provide that when the rent on base date for establishing rent under the four-year look-back period cannot be determined or the rent set on the base date was the subject of a fraudulent scheme to deregulate, the 3-part, court-sanctioned default formula for setting rents, e.g., lowest rent for comparable unit in building, will be used and a general catch-all, e.g. data compiled by DHCR or sampling method, will be available. 9 NYCRR (a)(1), (a)(2), (c) and (d)(2) are amended to provide: A tenant complaint of a service decrease will not be dismissed if the tenant failed to provide the owner with notice of the problem prior to filing a complaint with DHCR; any decrease in rent based upon a service decrease order will include a bar to future MCI and vacancy bonus rent increases; an owner s time to respond to a service decrease complaint will be reduced to 20 days if the tenant, in fact, gives prior notice, otherwise the response time is 60 days; if the tenant is forced to vacate, a 5 day response time is required and; if the complaint is for lack/reduction in heat/hot water then a 20 day response time is required. 9 NYCRR (c)(2) and (3) are amended to provide that tenants holding over after the lease expires (they failed to renew their lease) will be treated as month-to-month tenants and not held to a new full lease term. 9 NYCRR (a), (e), and (g) are amended to amend certain notice requirements. 9 NYCRR is amended to redefine harassment to include certain false filings and false statements designed to interfere with tenant s quiet enjoyment or rights. 9 NYCRR (a)(2)(ii) is amended and 9 NYCRR (a)(2) adds new subparagraphs (iii), (iv), (v), (vi), (vii), (viii) and (ix) and 9 NYCRR (a)(3)(iii) is amended to provide a more comprehensive list of exceptions to the rule that when examining rent overcharges the look-back period to determine an overcharge is four years. The list of exceptions includes: when there is an allegation of a fraudulent scheme to deregulate the unit; prior to base date there is an outstanding rent reduction order based upon a decrease in services; it is determined that there is a willful rent overcharge; there is a vacant or exempt 2

50 unit on the four-year base date, in which case DHCR may also look at the last rent registration, or; there is a need to determine whether a preferential rent exists. 9 NYCRR is amended by adding new subdivisions (c) and (d) to amend certain notice requirements. 9 NYCRR (a) is amended to clarify that registration information may be collected as required by DHCR, RSC, or NYCRR is amended to add paragraph (c) to provide that owners will not be able to amend a rent registration without going through an administrative proceeding with notice to the tenant unless the change is governed by another government agency. 9 NYCRR (a) is amended to clarify that a rent freeze for failing to register will include MCI increases and vacancy bonus increases. 9 NYCRR is amended to clarify filing requirements for Article 78 proceedings. 9 NYCRR is amended to clarify the 60 day statute of limitations from date of mailing of an order. 9 NYCRR is amended to prohibit luxury decontrol filings on SCRIE and DRIE tenants. 3

51 New York City Rent Stabilization Code Amendments 1. 9 NYCRR paragraphs (o) and (p) are re-lettered (p) and (q) and a new paragraph (o) is added as follows: (o) The Office of the Tenant Protection Unit (TPU). The office of the DHCR designated by the Commissioner to investigate and prosecute violations of the ETPA, the RSL and the City and State Rent laws. In furtherance of such designation, the TPU may invoke all authority under the ETPA, RSL, RSC and the State and City rent laws and the regulations thereunder that inures to the Commissioner, DHCR or the Office of Rent Administration. However, nothing contained herein shall limit the mission and authority of the Office of Rent Administration to administer and enforce the ETPA, the RSL, and the City and State rent laws and all such regulations promulgated thereunder NYCRR new paragraph (u) is added as follows: (u) The owner of any housing accommodation that is not subject to this code pursuant to the provisions of subdivision (r) of this section or of section (f)(19) of the New York City Rent and Eviction Regulations, shall give written notice certified by such owner to the first tenant of that housing accommodation after such housing accommodation becomes exempt from the provisions of this code or the city rent law. Such notice shall contain the last regulated rent, the reason that such housing accommodation is not subject to this Code or the city rent law, a calculation of how either the rental amount charged when there is no lease or the rental amount provided for in the lease has been derived so as to reach the applicable amount qualifying for deregulation pursuant to subdivision (r) of this section, (whether the next tenant in occupancy or any subsequent tenant in occupancy actually is charged or pays less than the applicable amount qualifying for deregulation), a statement that the last legal regulated rent or the maximum rent may be verified by the tenant by contacting DHCR and the address and telephone number of DHCR. Such notice shall be sent by certified mail within thirty days after the tenancy commences or after the signing of the lease by both parties, whichever occurs first or shall be delivered to the tenant at the signing of the lease. In addition, the owner shall send and certify to the tenant a copy of the registration statement for such housing accommodation filed with DHCR indicating that such housing accommodation became exempt from the provisions of this code or the city rent law, which form shall include the last regulated rent and shall be sent to the tenant within thirty days after the tenancy commences or the filing of such registration, whichever occurs later NYCRR is amended to add a new subdivision (l) as follows: (l)(1) Notwithstanding any other provisions of this code, the initial legal regulated rent shall be established pursuant to paragraph (2) for housing accommodations located in properties that were or continue to be owned by housing development fund companies (HDFC s) created pursuant to Article XI of the Private Housing Finance Law (whether 1

52 such an HDFC was for rental housing, a mutual company, or subject to cooperative or condominium ownership or had otherwise previously been subject to this code) where such property has been conveyed pursuant to a judgment of foreclosure or pursuant to a stipulation of settlement in a foreclosure action (whichever occurs first). (2) The initial legal regulated rent shall be the highest of: (i) (ii) (iii) maintenance or carrying charges, common charges, or rent in effect immediately prior to such conveyance; any minimum standard rent established by either HPD or DHCR as the respective supervising agency of an HDFC that was in effect immediately prior to such conveyance, even if such minimum standard rents had not been implemented for the specific building or housing accommodation; or the rent specifically set by HPD or DHCR as the respective supervising agency of an HDFC where such HDFC or a successor HDFC continues to own the building NYCRR (b) is amended to read as follows: Such legal regulated rent as well as preferential rent shall be [ previously established where: (1) the legal regulated rent is] set forth in [either] the vacancy lease or renewal lease pursuant to which the preferential rent is charged. [; or] 5. 9 NYCRR (b)(2) is repealed: [(2) for a vacancy lease or renewal lease which set forth a preferential rent and which was in effect on or before June 19, 2003, and the legal regulated rent was not set forth in either such vacancy lease or renewal lease, the legal regulated rent was set forth in an annual rent registration served upon the tenant in accordance with the applicable provisions of law, except that the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to section or of this Title shall not be examined.] 6. 9 NYCRR (c) is amended to read as follows: (c) Where the amount of the legal regulated rent is set forth either in a vacancy lease or renewal lease where a preferential rent is charged, [the amount of the legal regulated rent shall not be required to be set forth in any subsequent renewal of such lease, except that] the owner shall be required to maintain, and submit where required to by DHCR, the rental history of the housing accommodation immediately preceding such preferential rent to the present which may be prior to the four-year period preceding the filing of a complaint [pursuant to section or of this Title shall not be examined]. 2

53 7. 9 NYCRR (a)(3)(22) is amended to read as follows: (22) REWIRING: - new copper risers and feeders extending from property box in basement to every housing accommodation; must be of sufficient capacity (220 volts) to accommodate the installation of air conditioner circuits in living room and/or bedroom; [and] but otherwise excluding work done to effectuate conversion from master to individual metering of electricity approved by DHCR pursuant to paragraph (3) of subdivision (d) of this section NYCRR (a)(13) is amended to read as follows: (13) The DHCR shall not grant an owner's application for a rental adjustment pursuant to this subdivision, in whole or in part, if it is determined by the DHCR, based upon information received from any tenant or tenant representative or upon a review conducted on DHCR s own initiative that, as of the date of such application for [prior to the granting of approval to collect] such adjustment that the owner is not maintaining all required services, or that there are current immediately hazardous violations of any municipal, county, State or Federal law which relate to the maintenance of such services. However, as determined by the DHCR, such application may either be granted upon condition that such services will be restored within a reasonable time, or dismissed with leave to refile within sixty days which time period shall stay the two year filing requirement provided in section (a)(8) of this paragraph. [and] In addition, certain tenantcaused violations may be excepted NYCRR (d)(3)(iii) is amended to read as follows: (iii) Recipients of Senior Citizen Rent Increase Exemptions (SCRIE) or Disability Rent Increase Exemptions (DRIE): For a tenant who on the date of the conversion is receiving a SCRIE or DRIE authorized by section of the Rent Stabilization Law of Nineteen Hundred Sixty-nine, the rent is not reduced and the cost of electricity remains included in the rent, although the owner is permitted to install any equipment in such tenant's housing accommodation as is required for effectuation of electrical conversion pursuant to this paragraph. (a) After the conversion, upon the vacancy of the tenant, the owner, without making application to DHCR, is required to reduce the legal regulated rent for the housing accommodation in accordance with the Schedule of Rent Reductions set forth in Operational Bulletin , and thereafter [the] any subsequent tenant is responsible for the cost of his or her consumption of electricity, and for the legal rent as reduced, including any applicable major capital improvement rent increase based upon the cost of work done to effectuate the electrical conversion. (b) After the conversion, if a tenant ceases to receive a SCRIE or DRIE, the owner, without making application to DHCR, may reduce the rent in accordance with the Schedule of Rent Reductions set forth in Operational Bulletin , and thereafter the 3

54 tenant is responsible for the cost of his or her consumption of electricity, and for the legal rent as reduced, including any applicable major capital improvement rent increase based upon the cost of work done to effectuate the electrical conversion, for as long as the tenant is not receiving a SCRIE or DRIE. Thereafter, in the event that the tenant resumes receiving a SCRIE or DRIE, the owner, without making application to DHCR, is required to eliminate the rent reduction and resume responsibility for the tenant's electric bills NYCRR (c)(1) is amended to read as follows and (c)(ii) is renumbered (c)(iv) and a new (c)(ii) and (c)(iii) are added as follows: (1) For housing accommodations subject to this Code, an owner shall furnish to each tenant signing a vacancy or renewal lease, a rider in a form promulgated or approved by the DHCR, in larger type than the lease, describing the rights and duties of owners and tenants as provided for under the RSL including a detailed description in a format as prescribed by DHCR of how the rent was adjusted from the prior legal rent. Such rider shall conform to the "plain English" requirements of section of the General Obligations Law[,]. Copies of the form as promulgated by DHCR shall also be available in [Spanish, and] all languages that may be required pursuant to DHCR s language access plan. The rider shall be attached as an addendum to the lease. Upon the face of each rider, in bold print, in English and any other language as required by the DHCR language access plan, shall appear the following: "ATTACHED RIDER SETS FORTH RIGHTS AND OBLIGATIONS OF TENANTS AND LANDLORDS UNDER THE RENT STABILIZATION LAW." [("LOS DERECHOS Y RESPONSABILIDADES DE INQUILINOS Y CASEROS ESTAN DISPONIBLE EN ESPANOL")]. (i) For vacancy leases, such rider shall in addition also include a notice of the prior legal regulated rent, if any, which was in effect immediately prior to the vacancy, an explanation, and in a format prescribed by DHCR, [of] how the rental amount provided for in the vacancy lease has been computed above the amount shown in the most recent annual registration statement, as well as the prior lease, and a statement that any increase above the amount set forth in such registration statement is in accordance with adjustments permitted by the rent guidelines board and this Code. (ii) Such rider shall also set forth that the tenant may, within sixty days of the execution of the lease, require the owner to provide the documentation directly to the tenant supporting the detailed description regarding the adjustment of the prior legal rent pursuant to paragraph (i) of this subdivision. The owner shall provide such documentation within thirty days of that request. (iii) The method of service of the lease rider, the tenant request for documentation, and the owner s provision of documentation, together with proof of same, shall conform to the requirements set forth in the lease rider itself or such other bulletin or document rendered pursuant to section [(ii)] (iv) [re-numbered only text remains the same] 4

55 11. 9 NYCRR (c)(3) is amended to read as follows: (3) [Upon complaint by the] Where a tenant, permanent tenant or hotel occupant [that he or she was] is not furnished, as required by the above provision, with a copy of the lease rider pursuant to paragraph (1), [or] the notice pursuant to paragraph (2) [of this subdivision], or the documentation required on demand by paragraph (1)(ii) of this subdivision, the owner shall not be entitled to collect any adjustments in excess of the rent set forth in the prior lease unless the owner can establish that the rent collected was otherwise legal. In addition to issuing an order with respect to applicable overcharges, [the] DHCR shall order the owner to furnish the missing rider, [or] notice, or documentation. [In addition to such other penalties provided for pursuant to section of this Title, if the owner fails to comply within 20 days of such order, the owner shall not be entitled to collect any guidelines lease adjustment authorized for any current lease from the commencement date of such lease.] The furnishing of the rider, [or] notice, or documentation by the owner to the tenant or hotel occupant shall result in the elimination, prospectively, of such penalty. With respect to housing accommodations in hotels, noncompliance by the owner shall not prevent the hotel occupant from becoming a permanent tenant NYCRR (b) is amended to read as follows: (b) (1) Such order shall determine such facts or establish the legal regulated rent in accordance with the provisions of this Code. Where such order establishes the legal regulated rent, it shall contain a directive that all rent collected by the owner in excess of the legal regulated rent established under this section for such period as is provided in section (a) of this Title, or the date of the commencement of the tenancy, if later, either be refunded to the tenant, or be enforced in the same manner as prescribed in section (e) and (f) of this Title. Orders issued pursuant to this section shall be based upon the law and Code provisions in effect on March 31, 1984, if the complaint was filed prior to April 1, (2)Where either (i) the rent charged on the base date cannot be determined, or (ii) a full rental history from the base date is not provided, or (iii) the base date rent is the product of a fraudulent scheme to deregulate the apartment, or (iv) a rental practice proscribed under section (b), (c) and (d) has been committed, the rent shall be established at the lowest of the following amounts set forth in paragraph (3). (3) These amounts are: (i) the lowest rent registered pursuant to section of this Code for a comparable apartment in the building in effect on the date the complaining tenant first occupied the apartment; or 5

56 (ii) the complaining tenant s initial rent reduced by the percentage adjustment authorized by section of this Code; or (iii) the last registered rent paid by the prior tenant (if within the four year period of review); or (iv) if the documentation set forth in (i) through (iii) of this paragraph is not available or is inappropriate, an amount based on data compiled by the DHCR, using sampling methods determined by the DHCR, for regulated housing accommodations. (4) However, in the absence of collusion or any relationship between an owner and any prior owner, where such owner purchases the housing accommodations upon a judicial sale, or such other sale effected in connection with, or to resolve, in whole or in part, a bankruptcy proceeding, mortgage foreclosure action or other judicial proceeding, and no records sufficient to establish the legal regulated rent were made available to such purchaser, such orders shall establish the legal regulated rent on the date of the inception of the complaining tenant's tenancy, or the date four years prior to the date of the filing of an overcharge complaint pursuant to section of this Title, whichever is most recent, based on either: (i) [(1)] documented rents for comparable housing accommodations, whether or not subject to regulation pursuant to this Code, submitted by the owner, subject to rebuttal by the tenant; or (ii) [(2)] if the documentation set forth in subparagraph (i[1]) of this [subdivision] paragraph is not available or is inappropriate, data compiled by the DHCR, using sampling methods determined by the DHCR, for regulated housing accommodations; or (iii) [(3)] in the event that the information described in both subparagraphs (i) [(1)] and (ii) [(2)] of this [subdivision] paragraph is not available, the complaining tenant's rent reduced by the most recent guidelines adjustment. (5) This subdivision shall also apply where the owner purchases the housing accommodations subsequent to such judicial or other sale. [Notwithstanding the foregoing, this subdivision shall not be deemed to impose any greater burden upon owners with regard to record keeping than is provided pursuant to RSL section (g). In addition, where the amount of rent set forth in the rent registration statement filed four years prior to the date the most recent registration statement was required to have been filed pursuant to Part 2528 of this Title is not challenged within four years of its filing, neither such rent nor service of any registration shall be subject to challenge any time thereafter.] 6

57 13. 9 NYCRR (a)(1), (a)(2), (c) and (d)(2) are amended to read as follows: (a)(1) A tenant may apply to the DHCR for a reduction of the legal regulated rent to the level in effect prior to the most recent guidelines adjustment, subject to the limitations of subdivisions (c)-(h) of this section, and the DHCR shall so reduce the rent for the period for which it is found that the owner has failed to maintain required services. The order reducing the rent shall further bar the owner from applying for or collecting any further increases in rent including such increases pursuant to section of this Title until such services are restored or no longer required pursuant to an order of the DHCR. If the DHCR further finds that the owner has knowingly filed a false certification, it may, in addition to abating the rent, assess the owner with the reasonable costs of the proceeding, including reasonable attorney s fees, and impose a penalty not in excess of $250 for each false certification. (a)(2) Where an application for a rent adjustment pursuant to section (a)(2) of this Title has been granted, and collection of such rent adjustment commenced prior to the issuance of the rent reduction order, the owner will be permitted to continue to collect the rent adjustment regardless of the effective date of the rent reduction order, notwithstanding that such date is prior to the effective date of the order granting the adjustment. [In addition, regardless of the effective date thereof, a rent reduction order will not affect the continued collection of a rent adjustment pursuant to section (a)(1) of this Title, where collection of such rent adjustment commenced prior to the issuance of the rent reduction order.] However, an owner will not be permitted to collect any increment pursuant to section (a)(8) that was otherwise scheduled to go into effect after the effective date of the rent reduction order. (c) Except for complaints pertaining to heat and hot water or other conditions requiring emergency repairs, [B] before filing an application for a reduction of the legal regulated rent pursuant to subdivision (a) of this section, a tenant [must have] should [first] notify[ied] the owner or the owner's agent in writing of all the service problems listed in such application. A copy of the written notice to the owner or agent with proof of mailing or delivery [must] should be attached to the application. Applications should [may only] be filed with the DHCR no earlier than ten [10 and no later than 60] days after such notice is given to the owner or agent. Failure to provide such prior written notice will not be grounds for dismissal of the application. [Prior written notice to the owner or agent is not required for complaints pertaining to heat or hot water, or other conditions requiring emergency repairs.] Applications based upon a lack of adequate heat or hot water must be accompanied by a report from the appropriate city agency finding such lack of adequate heat or hot water. (d)(2) Upon receipt of a copy of the tenant s complaint from the DHCR, an owner shall have twenty (20) [45] days in which to respond[.] if the tenant provided DHCR with the proof of the written notice to the owner. If the tenant did not provide proof of written notice to the owner, an owner shall have sixty (60) days in which to respond. If the tenant s complaint indicates that the tenant has been forced to vacate the premises, the owner shall have five (5) days to respond. If the complaint pertains to heat and hot water 7

58 or to a condition which in DHCR s opinion may require emergency repairs, the owner shall have twenty (20) days to respond. Nothing herein shall preclude DHCR from granting an owner s request for a reasonable extension of time to respond in order to establish that service problems have been repaired. [the rest of the sections remains the same] NYCRR (c)(2) and (3) are amended to read as follows: (2) Where the tenant fails to timely renew an expiring lease or rental agreement offered pursuant to this section, and remains in occupancy after expiration of the lease, such lease or rental agreement may be deemed to be in effect, for the purpose of determining the rent in an overcharge proceeding, where such deeming would be appropriate pursuant to Real Property Law section 232-c. In such event, the expiring lease will be deemed to have been renewed upon the same terms and conditions at the legal regulated rent, together with any guidelines adjustments that would have been applicable had the offer of a renewal lease been timely accepted. Unless otherwise dictated by Real Property Law section 232-c, [T]the effective date of the rent adjustment under the deemed renewal lease shall commence on the first rent payment date occurring no less than 90 days after such offer is made by the owner. (3) [Notwithstanding] Where there is no deemed lease pursuant to the provisions of paragraph (2) of this subdivision, an owner may [elect to] commence an action or proceeding to recover possession of a housing accommodation in a court of competent jurisdiction pursuant to sections (c)(1) and (f) of this Title, where the tenant, upon the expiration of the existing lease or rental agreement, fails to timely renew such lease in the manner prescribed by this section NYCRR (a), (e), and (g) are amended to read as follows: (a) The tenant is violating a substantial obligation of his or her tenancy other than the obligation to surrender possession of such housing accommodation, and has failed to cure such violation after written notice by the owner that the violations cease within 10 days; or the tenant has willfully violated such an obligation inflicting serious and substantial injury upon the owner within the three-month period immediately prior to the commencement of the proceeding. If the written notice by the owner that the violations cease within ten days is served by mail, then five additional days, because of service by mail, shall be added, for a total of 15 days, before an action or proceeding to recover possession may be commenced after service of the notice required by section of this Part. (e) The tenant has unreasonably refused the owner access to the housing accommodation for the purpose of making necessary repairs or improvements required by law or authorized by the DHCR, or for the purpose of inspection or showing the housing accommodation to a prospective purchaser, mortgagee or prospective mortgagee, or other 8

59 person having a legitimate interest therein; provided, however, that in the latter event such refusal shall not be a ground for removal or eviction unless the tenant shall have been given at least five days' notice of the inspection or showing, to be arranged at the mutual convenience of the tenant and owner so as to enable the tenant to be present at the inspection or showing, and that such inspection or showing of the housing accommodation is not contrary to the provisions of the tenant's lease or rental agreement. If the notice of inspection or showing is served by mail, then the tenant shall be allowed five additional days to comply, for a total of ten days because of service by mail, before such tenant s refusal to allow the owner access shall become a ground for removal or eviction. (g) For housing accommodations in hotels, the tenant has refused, after at least 20 days' written notice, and an additional five days if the written notice is served by mail, to move to a substantially similar housing accommodation in the same building at the same legal regulated rent where there is a rehabilitation as set forth in section (a)(3) of this Part, provided: NYCRR is amended to read as follows: It shall be unlawful for any owner or any person acting on his or her behalf, directly or indirectly, to engage in any course of conduct (including but not limited to interruption or discontinuance of required services, or unwarranted or baseless court proceedings, or filing of false documents with or making false statements to DHCR) which interferes with, or disturbs, or is intended to interfere with or disturb, the privacy, comfort, peace, repose or quiet enjoyment of the tenant in his or her use or occupancy of the housing accommodation, or is intended to cause the tenant to vacate such housing accommodation or waive or not exercise any right afforded under this Code including the right of continued occupancy and regulation under the RSC and RSL NYCRR (a)(2)(ii) is amended to read as follows: (ii) subject to paragraphs (iii), (iv), (v), (vi), (vii), (viii) and (ix) of this paragraph, the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this section, and section of this Title, shall not be examined; [.] and [This subparagraph shall preclude] examination of a rent registration for any year commencing prior to the base date, as defined in section (f) of this Title, whether filed before or after such base date shall be precluded. [Except in the case of decontrol pursuant to section (r) or (s) of this Title, nothing contained herein shall limit a determination as to whether a housing accommodation is subject to the RSL and this Code, nor shall there be a limit on the continuing eligibility of an owner to collect rent increases pursuant to section of this Title, which may have been subject to deferred implementation, pursuant to section (a)(8) in order to protect tenants from excessive rent increases.] 9

60 18. 9 NYCRR (a)(2) new subparagraphs (iii), (iv), (v), vi), (vii), (viii) and (ix) are added as follows: (iii) Except in the case of decontrol pursuant to section (r) or (s) of this Title, nothing contained in this section shall limit a determination as to whether a housing accommodation is subject to the RSL and this Code, nor shall there be a limit on the continuing eligibility of an owner to collect rent increases pursuant to section of this Title, which may have been subject to deferred implementation, pursuant to section (a)(8) in order to protect tenants from excessive rent increases. (iv) In a proceeding pursuant to this section the rental history of the housing accommodation pre-dating the base date may be examined for the limited purpose of determining whether a fraudulent scheme to destabilize the housing accommodation or a rental practice proscribed under section (b), (c) or (d) rendered unreliable the rent on the base date. (v) An order issued pursuant to section (a) of this Code remaining in effect within four years of the filing of a complaint pursuant to this section may be used to determine an overcharge or award an overcharge or calculate an award of the amount of an overcharge. (vi) For the purpose of determining if the owner establishes by a preponderance of the evidence that the overcharge was not willful, examination of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this section shall not be precluded. (vii) For the purpose of determining any adjustment in the legal regulated rent pursuant to section (a)(2)(ii) of this Title, or any adjustment pursuant to a guideline promulgated by the New York City Rent Guidelines Board that requires information regarding the length of occupancy by a present or prior tenant or the rent of such tenants, review of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this section shall not be precluded. (viii) For the purposes of establishing the existence or terms and conditions of a preferential rent under section (c), review of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this section shall not be precluded. (ix) For the purpose of establishing the legal regulated rent pursuant to section (a)(3)(iii) where the apartment was vacant or temporarily exempt on the base date, review of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this section shall not be precluded. 10

61 19. 9 NYCRR (a)(3)(iii) is amended to read as follows: Where a housing accommodation is vacant or temporarily exempt from regulation pursuant to section of this Title on the base date, the legal regulated rent shall be [the rent agreed to by the owner and the first rent stabilized tenant taking occupancy after such vacancy or temporary exemption, and reserved in a lease or rental agreement; or, in the event a lesser amount is shown in the first registration for a year commencing after such tenant takes occupancy, the amount shown in such registration, as adjusted pursuant to this Code.] the prior legal regulated rent for the housing accommodation, the appropriate increase under section , and if vacated or temporarily exempt for more than one year, as further increased by successive two year guideline increases that could have otherwise been offered during the period of such vacancy or exemption and such other rental adjustments that would have been allowed under this Code NYCRR (g) is re-lettered (h) and new subdivision (g) is added to read as follows: (g) Where the rent charged on the base date cannot be determined, a full rental history from the base date is not provided, or the base date rent is the product of a fraudulent scheme to deregulate the apartment or a rental practice proscribed under (c) and (d) has been committed, the rent shall be established at the lowest of the following amounts. (1) the lowest rent registered pursuant to section of this Code for a comparable apartment in the building in effect on the date the complaining tenant first occupied the apartment; or (2) the complaining tenant s initial rent reduced by the percentage adjustment authorized by section of this Code; or (3) the last registered rent paid by the prior tenant (if within the four year period of review; or (4) if the documentation set forth in paragraphs (1)through (3) of this subdivision is not available or is inappropriate, data compiled by the DHCR, using sampling methods determined by the DHCR, for regulated housing accommodations. However, in the absence of collusion or any relationship between an owner and any prior owner, where such owner purchases the housing accommodations upon a judicial sale, or such other sale effected in connection with, or to resolve, in whole or in part, a bankruptcy proceeding, mortgage foreclosure action or other judicial proceeding, and no records sufficient to establish the legal regulated rent were made available to such purchaser, such orders shall establish the legal regulated rent on the date of the inception of the complaining tenant's tenancy, or the date four years prior to the date of the filing of an overcharge complaint pursuant to this section, whichever is most recent, based on 11

62 either: (1) documented rents for comparable housing accommodations, whether or not subject to regulation pursuant to this Code, submitted by the owner, subject to rebuttal by the tenant; or (2) if the documentation set forth in paragraph (1) of this subdivision is not available or is inappropriate, data compiled by the DHCR, using sampling methods determined by the DHCR, for regulated housing accommodations; or (3) in the event that the information described in both paragraphs (1) and (2) of this subdivision is not available, the complaining tenant's rent reduced by the most recent guidelines adjustment. This subdivision shall also apply where the owner purchases the housing accommodations subsequent to such judicial or other sale. [(g)] (h) [re-lettered only text remains the same] NYCRR is amended by adding new subdivisions (c) and (d) to read as follows: (c) Unless otherwise expressly provided in this code, no additional time is required for service by mail of any notice, order, answer, lease offer or other papers, beyond the time period set forth in the code and such time period provided is inclusive of the time for mailing. (d) Unless otherwise expressly provided in this code, no additional time is required to respond or to take any action when served by mail with any notice, order, answer, lease offer, or other papers, beyond the time period set forth in this code and the time to respond is commenced upon mailing of said notice, order answer, lease offer or other paper NYCRR (a) is amended to read as follows: (a) An annual registration shall be filed containing the current rent for each housing accommodation not otherwise exempt, a certification of services, and such other information as may be required by the DHCR, pursuant to the RSL, RSC or section NYCRR is amended to add paragraph (c) to read as follows: (c) An owner seeking to file an amended registration statement for other than the present registration year must file an application pursuant to sections (b) and Part 2527 of this code as applicable to establish the propriety of such amendment unless the 12

63 amendment has already been directed by DHCR or is directed by another governmental agency that supervises such housing accommodation NYCRR (a) is amended to read as follows: (a) The failure to properly and timely comply, on or after the base date, with the rent registration requirements of this Part shall, until such time as such registration is completed, bar an owner from applying for or collecting any rent in excess of: the base date rent, plus any lawful adjustments allowable prior to the failure to register. Such a bar includes but is not limited to rent adjustments pursuant to section of this title. The late filing of a registration shall result in the elimination, prospectively, of such penalty, and for proceedings commenced on or after July 1, 1991, provided that increases in the legal regulated rent were lawful except for the failure to file a timely registration, an owner, upon the service and filing of a late registration, shall not be found to have collected a rent in excess of the legal regulated rent at any time prior to the filing of the late registration. Nothing herein shall be construed to permit the examination of a rental history for the period prior to four years before the commencement of a proceeding pursuant to sections and of this Title NYCRR is amended to read as follows: The filing of a PAR against an order, other than an order adjusting, fixing or establishing the legal regulated rent, shall stay such order until the final determination of the PAR by the commissioner. Notwithstanding the above, that portion of an order fixing a penalty pursuant to section (a) of this Title, that portion of an order resulting in a retroactive rent abatement pursuant to section of this Title, that portion of an order resulting in a retroactive rent decrease pursuant to section of this Title, and that portion of an order resulting in a retroactive rent increase pursuant to section (a)(2), (3), (b) and (c) of this Title, shall also be stayed by the timely filing of a PAR against such orders until the expiration of the period for seeking review pursuant to article seventy-eight of the civil practice law and rules [60 days have elapsed after the determination of the PAR by the commissioner]. However, an order granting a rent adjustment pursuant to section (a)(2) of this Title, against which there is no PAR filed by a tenant that is pending, shall not be stayed. Nothing herein contained shall limit the commissioner from granting or vacating a stay under appropriate circumstances, on such terms and conditions as the commissioner may deem appropriate NYCRR is amended to read as follows: A proceeding for judicial review pursuant to article 78 of the Civil Practice Law and Rules may be instituted only to review a final order of the DHCR pursuant to section (c)(2) of this Title; or to review a final order of the commissioner pursuant to section of this Title; or after the expiration of the 90-day or extended period within which the commissioner may determine a PAR pursuant to section of this 13

64 Title, and which, therefore, may be "deemed denied" by the petitioner. The petition for judicial review shall be brought in the Supreme Court in the county in which the subject housing accommodation is located and shall be served upon the DHCR and the Attorney General. A proceeding for judicial review of an order issued pursuant to section (c)(2) or section of this Title shall be brought within 60 days after the issuance date of such order. Issuance date is defined as the date of mailing of the order. A party aggrieved by a PAR order issued after the 90-day or extended period of time within which the petitioner could deem his or her petition "denied" pursuant to section of this Title, shall have 60 days from the date of such order to commence a proceeding for judicial review, notwithstanding that 60 days have elapsed after such 90-day or extended "deemed denial" period has expired. Service of the petition upon the DHCR shall be made by either: [the rest of the section remains the same] NYCRR is amended to add a new paragraph (e) as follows: (e) No such ICF may be served on any apartment where the tenant is the recipient of a Senior Citizen Rent Increase Exemption (SCRIE) or a Disability Rent Increase Exemption (DRIE). 14

65 CONSOLIDATED - REGULATORY IMPACT STATEMENT SUMMARY 1. STATUTORY AUTHORITY: The Administrative Code of the City of New York, (also known as the Rent Stabilization Law ) (RSL) (b) provides authority to the Division of Housing and Community Renewal ( DHCR ) to amend the implementing regulations (also known as the Rent Stabilization Code ) ( RSC ); Section 44 of Chap. 97, Part B of the Laws of 2011 ( the Rent Law of 2011 ) further empowers DHCR to promulgate rules and regulations to implement and enforce all provisions of the Rent Law of 2011 and any law renewed or continued by the Rent Law of 2011 which includes the RSL. RSL (b); (c); (d); ; (b); and also provide specific statutory authority governing the subject matter of many of the proposed amendments. 2. LEGISLATIVE OBJECTIVES The overall legislative objectives are contained in Sections and of the RSL and Section 2 of the Emergency Tenant Protection Act ( ETPA ). Because of a serious public emergency, the regulation of residential rents and evictions is necessary to prevent the exaction of unreasonable rents and rent increases and to forestall other disruptive practices that would produce threats to public health, safety and general welfare. DHCR is specifically authorized by RSL (c)(1) to promulgate regulations to protect tenants and the public interest, and is empowered by the Rent Law of 2011 to promulgate regulations to implement and enforce new provisions added by the Rent Law of 2011 as well as any law continued or renewed by the Rent Law of 2011 which includes the RSL. 1

66 3. NEEDS AND BENEFITS DHCR has not engaged in an extensive amendment process with respect to these regulations since Since that time there has been significant litigation interpreting, not only these regulations, but the laws they implement. In addition, DHCR has had twelve years of experience in administration which informs this process so does its continuing dialogue during this period with owners, tenants, and their respective advocates. This dialogue is not only through its Office of Rent Administration (ORA) which engages in close to one hundred forums and meetings on an annual basis, but through the Tenant Protection Unit (TPU) which has been created to investigate and prosecute violations of the RSL. DHCR underwent the regulatory process for the promulgation of amendments expressly required by the Rent Law of 2011 which generated further comments. This specific promulgation process was also preceded by a mass outreach to known stakeholders in the field to solicit additional comments and suggestions. The needs and benefits of some of the specific modifications proposed are highlighted below. a. Addition of TPU definition Its inclusion demonstrates DHCR s commitment to the TPU and proactive enforcement of the RSL. b. Codification of Exit Registrations This new provision in the regulation is taken from RSL (b) and provides for the service of appropriate notices on a tenant in an apartment alleged to be exempt from the RSL because of high rent vacancy deregulation. With the passage of the Rent Law of 2011 which 2

67 expressly gave DHCR additional authorization to enforce the RSL, inclusion of this provision in the regulations is appropriate. Greater oversight is demonstrably necessary in light of discrepancies among the registrations filed; those that are no longer being filed with high rent vacancy deregulation as the stated reason; and the number of units simply failing to register but without explanation. Tying compliance into the current registration system provides an appropriate enforcement mechanism. c. Preferential Rent Review There exists a compelling need to adopt a new regulation which requires owners, in situations where a tenant is initially charged a preferential lesser rent and then charged a higher rent, to demonstrate the legitimacy of that higher rent. Close to twenty-five percent of the rents in New York City are listed in DHCR s registration data-base as having preferential rents. The present regulations contain incorrect legal standards. Further, courts have also acknowledged that the 4 year rule of review gives way in areas where there is a continuing obligation to conform one s conduct to standards created by other provisions of the Rent Stabilization Law. The present rule of time-limiting review to four years of preferential rent (regardless of when the higher rent was theoretically assumed to be proper, but never really established), places tenants in an untenable situation that discourages the exercise of their right to obtain a proper rent history. 3

68 d. Submetering costs and MCI eligibility This new provision properly recalibrates what equipment is MCI eligible with respect to submetering. e. C violations and MCI s DHCR will now be conducting independent reviews of New York City s database for immediately hazardous violations which will assure uniform and consistent enforcement of this standard governing MCI s. f. Enhanced DRIE and SCRIE Protections Since the last code review, the State of New York adopted a Disability Rent Increase Exemption (DRIE) for eligible low income disabled tenants similar to the existing Senior Citizen Rent Increase Exemption (SCRIE) available to the low income elderly. DHCR regulations, which already prohibit the implementation of electrical submetering for SCRIE recipients, will be extended to disabled tenants receiving DRIE. DHCR also is amending its regulations to exempt both SCRIE and DRIE tenants from the high income/high rent deregulation procedures set forth in the RSL as those tenancies have already been vetted through other government programs to have income far below that required for deregulation. g. Lease Rider Requirements and Enforcement DHCR data and experience shows that Individual Apartment Improvement (IAI) increases upon vacancy make up one of the largest components of increases under the RSL. Paradoxically, a tenant may now only secure meaningful information or review of the propriety of these increases by filing an overcharge complaint before DHCR or a Court. Providing more information in the vacancy lease rider itself, as well as affording tenants the 4

69 ability to demand supporting documentation directly from the owners without Court or DHCR intercession, will provide a cost effective alternative to such proceedings. h. Codification of the overcharge default formula DHCR uses this kind of formula for setting rents where an owner fails to provide appropriate documentation to establish the legal rent in an overcharge proceeding or where there was an illusory prime tenancy or a fraudulent scheme to deregulate the housing accommodation. However, the regulations themselves, did not incorporate it. i. Strengthening the process for service complaints The present regulation provides that tenants are required, prior to filing a service complaint with DHCR, to send a certified letter to the owner regarding the service deficiency. More than a decade of implementation has led DHCR to the conclusion that the rule has often become a hurdle that suppresses the filing of complaints by the most vulnerable tenants. The DHCR amendments also bar those parts of MCI increases slated for future collection, where there is a subsequently issued service reduction order. Precluding the collection of these future 6% MCI increments until an outstanding service deficiency is cured, is consistent with the plain language of the RSL, which bars collection of increases where there is a failure to provide services and will aid DHCR in incentivizing prompt restoration of services. Similarly vacancy and longevity increases will no longer be allowed where there is an outstanding service reduction. 5

70 j. Deemed Leases A 2000 codification of deemed lease rules apparently allowed owners to claim that they could extract the full rent from tenants for a new lease term where a tenant may have remained only for a short period prior to moving out. DHCR is returning to the more traditional and appropriate use of such deemed leases in overcharge proceedings. k. Harassment Definition This regulation expands the definition of harassment to reflect some of the more up-todate schemes to deprive tenants of their legitimate rights as rent stabilized tenants. Not every harassing act is designed to create a vacancy, but can include intimidating the tenant in place to preclude the legitimate exercise of such rights. These actions can include false and illegitimate filings before DHCR l. Codification of Certain Four Year Rule Exceptions These provisions seek to set forth, in one place, a more comprehensive list of areas where, to date, by statute, case law or regulation, the four year rule that ordinarily governs rent and overcharge review, has been held not to be applicable and changes the rules with respect to preferential rents and vacancy on the base date cases. The preferential rent change has already been explained. With claims of vacancies on the base date, it is more appropriate to test the validity of a present rent against these usual standards of overcharge review, rather than simply rubber-stamping any rent that is collected because of an alleged fortuity of a vacancy. 6

71 m. Amended registration and registration requirements DHCR had accepted for filing, amended annual registrations at any time for any year. These amendments, if treated similarly to late registrations under the RSL, could carry a substantial penalty, but no penalty has been imposed. The number of such amendments is significant and has the effect of corrupting the purpose of DHCR s registration data base as a contemporaneously created history of rents. Now, such amendments, where appropriate, would be reviewed and regulated by DHCR. DHCR is also amending the registration provisions to appropriately reflect DHCR s authority and ability to change the registration forms themselves each year to capture data appropriate for the administration and enforcement of the RSL and RSC. n. Freeze of Vacancy Bonuses based on Failure to Register This change will conform DHCR s practice to this statutory penalty for failing to properly register. 4. COSTS The regulated parties are tenants and owners. There are no additional direct costs imposed as costs of regular administration are capped at $10 per unit per year. The amended regulations do not impose any new responsibility upon state or local government. Owners will need to be initially more vigilant to assure their compliance with these changes, but such costs are already a generally-accepted expense of owning regulated housing. There are increased penalties in some instances if the regulations are violated, but the costs of conforming present business practices to the change in standards is not substantial. In addition, these consequences are largely consistent with existing case law or otherwise necessary to secure compliance. DHCR has made a significant effort to assure a safe harbor 7

72 or alternatives from the more dire consequences for owners who are operating in good faith and in substantial compliance. 5. LOCAL GOVERNMENT MANDATES No new program, service, duty or responsibility is imposed on local government. 6. PAPERWORK The amendments may, in a limited fashion, increase the paperwork burden. There will be additional costs associated with filings and the need for additional record retention, but these costs are comparably minimal and are of a kind with already existing registration and record keeping requirements. Any particularized specific claims that a changed regulation may create hardship or inequity can and will be handled in the context of the administrative applications. 7. DUPLICATION No known duplication of State or Federal requirements except to the extent required by law. 8. ALTERNATIVES DHCR considered a variety of alternatives to many of these new rules. The alternative of continuing the rule presently in place for all of these changes was considered and rejected. Other alternatives suggested, but rejected included; treating amended registrations as the equivalent of late registration, creating even more stringent pre-requirements for MCI filings with respect to violation clearance, and even more severe penalties for notice violations with respect to exit registrations and the provision of the lease rider. Continuation of the present lease rider rule, requiring an order from DHCR directing that such a rider be provided prior to any penalty, was not a real option as it effectively limits an owner s necessary compliance 8

73 with lease rider requirements to a subset of tenants already sufficiently knowledgeable to file a complaint with DHCR. 9. FEDERAL STANDARDS Do not exceed any known minimum Federal standards. 10. COMPLIANCE SCHEDULE It is not anticipated that regulated parties will require any significant additional time to comply with the proposed rules. 9

74 CONSOLIDATED - REGULATORY IMPACT STATEMENT 1. STATUTORY AUTHORITY: Section (b) of the Administrative Code of the City of New York, (also known as the Rent Stabilization Law ) (RSL) and RSL section (a) provide authority to the Division of Housing and Community Renewal ( DHCR ) to amend the implementing regulations (also known as the Rent Stabilization Code ) ( RSC ); Section 44 of Chap. 97, Part B of the Laws of 2011 ( the Rent Law of 2011 ) further empowers DHCR to promulgate rules and regulations to implement and enforce all provisions of the Rent Law of 2011 and any law renewed or continued by the Rent Law of 2011 which includes the RSL. The RSL also provides specific statutory authority governing the subject matter of many of the proposed amendments: RSL (b) provides for notice and information to tenants upon deregulation and service of an exit rent registration identifying such apartments as now exempt from regulation. RSL provides for rent registration generally. RSL (c)14 provides for preferential rents and the subsequent charging of a legal rent, tied also to its use to meet deregulation rent thresholds. RSL (c)(2) mandates promulgation of a code that requires owners not to exceed the level of lawful rents. RSL (c)14 requires owners at the option of the tenant to grant one or two year vacancy and renewal increases. RSL (c)(5) allows the RSC to include guidelines to assure that the levels for rent increase will not be subverted or made ineffective. RSL (c)(6)(b) provides that DHCR may establish criteria whereby it may act upon major capital improvement ( MCI ) applications. RSL (d) provides for a rent stabilized lease rider in a form promulgated by DHCR. RSL (b) empowers DHCR to enforce the RSL and the RSC by issuance of appropriate orders, issuance of overcharge 1

75 determinations, and to establish treble damages. RSL provides that in addition to any other remedy provided by law, any tenant may apply to DHCR for a reduction of the rent in effect prior its most recent adjustment and an order requiring such services to be maintained; that DHCR shall reduce the rent to such level where an owner has failed to maintain such services; that such owner shall also be barred from applying for or collecting any further rent increases ; and that the restoration of such services shall result in the prospective elimination of such sanctions. 2. LEGISLATIVE OBJECTIVES The overall legislative objectives are contained in Sections and of the RSL and Section 2 of the Emergency Tenant Protection Act ( ETPA ). The Legislature has determined that, because of a serious public emergency, the regulation of residential rents and evictions is necessary to prevent the exaction of unreasonable rents and rent increases and to forestall other disruptive practices that would produce threats to public health, safety and general welfare. The legislation also has an objective to assure that any transition from regulation to normal market bargaining with respect to such landlords and tenants is administered with due regard to these emergency conditions. DHCR is specifically authorized by RSL (c)(1) to promulgate regulations to protect tenants and the public interest, and is empowered by the Rent Law of 2011 to promulgate regulations to implement and enforce new provisions added by the Rent Law of 2011 as well as any law continued or renewed by the Rent Law of These laws include the ETPA, the RSL, and the City and State Rent Control Laws. 2

76 3. NEEDS AND BENEFITS DHCR has not engaged in an extensive amendment process with respect to these regulations since Since that time there has been significant litigation interpreting, not only these regulations, but the laws they implement. In addition, DHCR has had twelve years of experience in administration which informs this process, as does its continuing dialogue during this period with owners, tenants, and their respective advocates. DHCR personnel within its Office of Rent Administration (ORA) engages in close to one hundred forums and meetings on an annual basis where the administration and implementation of these laws are discussed. In the last year this information gathering process has been enhanced through several additional actions taken by DHCR. First, DHCR created the Tenant Protection Unit (TPU), a unit designated by the Commissioner to investigate and prosecute violations of the ETPA, the RSL and the City and State Rent Laws. TPU, itself, has met with the various stakeholders in an effort to ascertain what issues and concerns impinge on the owner and tenant community affected by these regulations. Second, DHCR underwent the regulatory process for the promulgation of amendments expressly required by the Rent Law of That process generated significant comments on other issues relating to the Rent Stabilization Code. Third, this specific promulgation process was preceded by a mass outreach to known stakeholders in the field to solicit even further comments and suggestions. The needs and benefits of some of the specific modifications proposed are highlighted below. 3

77 a. Addition of TPU. Although the existing regulations already provide for delegation of functions under RSL, the inclusion of TPU as a specific term within the regulations, demonstrates DHCR s commitment to the TPU and proactive enforcement of the RSL. b. Codification of Exit Registrations. This new provision in the regulation is taken almost verbatim from RSL (b), a provision of the RSL added by the New York City Council pursuant to Local Law No. 12 of It provides for the service of appropriate notices on a tenant who resides in an apartment that an owner asserts is no longer subject to the RSL because of high rent vacancy deregulation. The enforcement of this section without a corresponding regulatory provision has been inconsistent and problematic. Although Courts have denied increases without compliance with its provisions because of its initial enactment by the City Council, there was some question as to the ability to integrate it into a DHCR enforcement paradigm as a portion of the Rent Laws. With the passage of the Rent Law of 2011 which expressly gave DHCR authorization to enforce any such law, the state legislature resolved this matter, making its inclusion of this provision in the regulations appropriate. This greater oversight is long overdue. In New York City in 2011, 14,175 exit registrations were filed; in 2010, 16,907 units; and in 2009, 18,617. Those owners listing high rent vacancy deregulation as the reason was a lesser subset; on an annual basis: 11,364 units in 2011, 12,911 units in 2010 and 13,557 units in However, the number of units leaving the system (and without explanation) seems to be higher. In 2009, annual registrations (without initial registrations) were filed for 865,374 apartments. In 2011, 771,648 were filed, demonstrating that 93,726 units left the registration system. TPU and 4

78 ORA have an ongoing program to ascertain why apartments are not being registered. This program s inquires have resulted in the re-registration of 1,688 buildings with 16,969 apartments as of March 2013, all leaving a significant gap. Obviously there needs to be a more regularized reporting requirement with consequences rather than the present system which has no enforcement mechanism. Tying compliance into the current registration system will provide an enforcement mechanism subject to the same curative provisions used in the applicable registration provisions in the RSL. The exit registrations, themselves, give owners a contemporaneous benchmark which will aid them in legitimate efforts to contemporaneously establish the propriety of high rent/vacancy deregulation and help them defend against claims by tenants that such deregulations are part of a fraudulent scheme as defined by the Court of Appeals in Grimm v DHCR, 15 N.Y.3d 358, 912 N.Y.S.2d 491 (1 st Dept. 2010). Conversely, tenants will have greater awareness of their rights and be able to more accurately ascertain whether their apartment was properly deregulated. c. Preferential Rent Review Courts have ruled that the present regulations are incorrect to the extent that they assume that the preferential rent may be preserved exclusively by the filing of a registration or that the passage of more than four years precludes review as to whether there is a truly preferential rent. Courts have also acknowledged that the 4 year rule gives way in areas where there is a continuing obligation to conform one s conduct to standards created by other provisions of the Rent Stabilization Law. 5

79 Preferential rent is one of those areas. There exists a compelling need to adopt a new regulation which requires owners, in situations where a tenant is initially charged a preferential lesser rent and then charged a higher rent, to demonstrate the legitimacy of that higher rent. Clearly there can be no conceivable way to check whether that previously established higher rent was proper without first examining the lease preceding it, and any other increases that went into creating that higher rent, even if such increases are more than four years before a complaint is filed. No statutory proscription exists to review that higher rent because of the passage of four years. Time-limiting that review to four years regardless of when the higher rent was theoretically assumed to be proper, but never really established, places tenants in an untenable situation that discourages the exercise of their right to obtain a proper rent history. A tenant would need to decide, if the tenant is not paying this higher rent, whether to seek an immediate review of the higher rent or to hold off on seeking a rental review and let the time period for review run out and risk paying that higher rent at a later date without review. Alternatively, in seeking that review, the tenant would risk no longer being treated as a preferred by the owner upon lease renewal. Filing now may be a lose situation; failure to file may be a lose situation later. As for owners, the actual benefits inuring to them that have been advanced as rationales behind these preferences are questionable when weighted against the actual data. Either owners, it is explained, are providing discounts to those they perceive will be good tenants; or in that certain boroughs, the rent stabilized rents will actually exceed market rents. 6

80 Neither explanation comes close to explaining the scope and prevalence of such preferential rents, given the legislature s findings that government intervention is necessary to prevent the exaction of even higher rents and rent increases, and that owner advocacy groups routinely assert that the legal rents under this system deprive owners of an appropriate return. On the other hand, in Grimm v. DHCR, supra, the Court of Appeals indicated that such claims of a discount may well be part of a fraudulent scheme to deregulate an apartment. Close to twenty-five percent of the rents, 203,408 apartments in New York City, according to DHCR registration data-base, are listed as of May 2012 as having preferential rents (814,500 were registered), and there is no discernable pattern to support the rationale that these are simply lower rents in less hot boroughs. These preferential rents are equally prevalent in each of the four boroughs of New York City which have the majority of rent regulated units, with the largest number of preferential rents in Manhattan, cutting against the proffered explanation that preferential rents are an out-of-manhattan phenomenon. As reported by DHCR to the NYC Rent Guidelines Board, as of May 16, 2012, there are 42,537 preferential rents registered in the Bronx, 50,406 in Brooklyn, 47,669 in Queens and 60,778 in Manhattan. d. Submetering costs and MCI eligibility This new provision properly recalibrates what equipment is MCI eligible with respect to submetering so that tenants are not charged for that part of a submetering installation that primarily benefits owners. Submetering promotes energy efficiency by placing the costs of electrical usage as well as its future fluctuations directly on the tenants rather than filtering those increases through 7

81 the RSL system of controlling rent increases. Thus, market risks related to energy costs are essentially shifted from the owners to their tenants with the goal of making tenants more likely to conserve and budget their electrical usage. Tenants do receive a corresponding decrease from their legal rent when DHCR approves submetering, based on a formula that will reflect the estimated current cost of such electrical usage. However, allowing an MCI rent increase based on the installation of the device that enables such submetering, immediately results in less of a rent decrease than that formula provides. Other possible alternatives, such as barring submetering or continuing the present formulation, are not as appropriate. The regulatory amendment still promotes the energy conservation consistent with what DHCR and its predecessor rent agencies have done for forty years, but more appropriately apportions some of the costs between owner and tenant. Accordingly, DHCR will still allow increases for rewiring and electrical upgrades, but not for the submetering equipment itself. e. C violations and MCI s The presence of an immediately hazardous C violation leads to the denial of an MCI. Weinreb Management v. DHCR, 295 A.D.2d 232, 744 N.Y.S.2d 321 (1 st Dept. 2002); 370 Manhattan Avenue Co., LLC v. DHCR, 11 A.D.3d 370, 783 N.Y.S.2d 38 (1 st Dept. 2004); 251 West 98 th Street Owners LLC v. DHCR, 276 A.D.2d 265, 713 N.Y.S.2d 729 (1 st Dept. 2000) Although not so limited by its regulations, as a matter of practice, DHCR was not conducting any independent review of the New York City s Violation Database, but only reviewed such violations where they were otherwise brought to DHCR s attention. 8

82 This practice, itself, has already been mitigated by subsequent case law, where the Appellate Division noted that others than the affected tenant themselves could legitimately bring such violations to DHCR s attention. Fieldbridge Associates LLC v. DHCR, 87 A.D.3d 598, 927 N.Y.S.2d 918 (1 st Dept. 2011) Since the promulgation of this Code provision in 1987, the New York City Violation database has become readily available online, and New York City has implemented numerous efficiencies to assure its data is current. This new codification benefits owners and tenants. Tenants will obtain uniform and consistent enforcement of the already existing regulatory standards governing MCI s. For both owners and tenants, the modification in procedure to be applied after the effective date of the regulatory change is further coupled with a specific test period which provides all parties going forward with greater certainty as to whether specific violations will impinge on the grant of the MCI itself, or instead be the subject of a subsequent rent decrease application. f. Enhanced DRIE and SCRIE Protections Since the last code review, the State of New York adopted a Disability Rent Increase Exemption (DRIE) for eligible low income disabled tenants similar to the existing Senior Citizen Rent Increase Exemption (SCRIE) available to the low income elderly. DHCR regulations, which already prohibit the implementation of electrical submetering for SCRIE recipients, will be extended to disabled tenants receiving DRIE. DHCR also is amending its regulations to exempt both SCRIE and DRIE tenants from the high income/high rent deregulation procedures set forth in the RSL. As those tenancies have already been vetted through other government programs to have income far below that 9

83 required for deregulation, the procedure, if invoked by the owners, cannot obtain any meaningful result. It simply creates unneeded stress on these vulnerable populations. Even worse, it may result in the inappropriate loss of apartments through these senior or disabled tenants failing to adequately respond to mechanically generated notices as part of the process. g. Lease Rider Requirements and Enforcement DHCR data and experience shows that Individual Apartment Improvement (IAI) increases upon vacancy make up one of the largest components of increases under the Rent Stabilization Law. Paradoxically, because the improvements do not require tenant consent, they are among the least regulated. A tenant may only secure meaningful information or review of the propriety of these increases by filing an overcharge complaint before DHCR or a Court. This is a somewhat cumbersome and costly process for both owners and tenants. Providing more information in the vacancy lease rider itself, as well as affording tenants the ability to demand supporting documentation directly from the owners without Court or DHCR intercession, will provide a cost effective alternative to such proceedings. Greater transparency in how vacancy rents are set, will allow greater self-policing and encourage voluntary compliance with the Rent Stabilization Law. The change, itself, is not a significantly increased burden on owners as owners are already required to retain this information and make it available to DHCR, or face severe penalties. The Rent Stabilization Code, itself, used to contain severe penalties for failing to provide such lease riders and Courts have denied increases that an owner seeks to secure without an appropriate lease. DHCR designed the consequences for non-compliance to be similar to those for failing to register, which contains ways to recognize a variety of mitigating circumstances, and also time-limits the period for these direct demands for information. 10

84 h. Codification of the overcharge default formula DHCR and its predecessor agency have used this type of formula for setting rents where an owner fails to provide appropriate documentation to establish the legal rent in an overcharge proceeding. The same test is also used where there was an illusory prime tenancy or a fraudulent scheme to deregulate the housing accommodation. However, the regulations, themselves, did not incorporate the formula. Instead, a modified formula was included in the RSL by the 2000 amendments that is available only in very limited circumstances, largely for buyers in foreclosure proceedings. The inclusion of this limited formula but not the actual rule itself has caused confusion. i. Strengthening the process for service complaints The present regulation provides that tenants are required, as a precondition to filing a service complaint with DHCR, to send a certified letter to the owner 10 to 60 days prior to filing a complaint regarding the service deficiency. A failure to append the letter to the DHCR complaint, results in dismissal of the application. This rule, enacted as part of the Code in 2000, had, as its goal, fostering voluntary compliance by owners to provide required services. More than a decade of implementation has led DHCR to the conclusion that, while positive interaction between owners and tenants regarding repairs without DHCR s intervention needs to be encouraged, the dismissal of meritorious service complaints on this basis is an even greater problem. The rule has often become a hurdle that suppresses the filing of complaints by the most vulnerable tenants. DHCR, as part of its service reduction procedures, already recognizes and gives owners notice and an opportunity to cure service complaints prior to the issuance of rent reduction 11

85 orders. Even after such reductions, DHCR has a process to restore the rents. Nonetheless, extensive numbers of rent reduction cases are granted and applications for rent (service) restoration need to be filed. For calendar year 2009, there were 2,469 rent reduction applications properly filed based on failure to provide services and 1,013 rent reductions orders issued. For the calendar year 2010, there were 2,432 applications filed and 1,048 rent reduction orders issued. For the calendar year 2011 there were 2,342 applications filed and 1,156 rent reduction orders issued. Rent restoration applications, after some lag time, eventually roughly match rent reductions ordered. For the calendar year 2009, there were 1,165 restoration applications filed. For the calendar year 2010, there were 1,146 applications filed. For the calendar year 2011, there were 1,141 applications filed. (Significantly, over the three year period, more than 25% of the rent (service) restoration orders found services not restored.) DHCR has recently implemented its code red processing whereby DHCR, on the most egregious service issues notifies owners of the service reduction complaint and through the inspection process will assist owners in getting access to apartments, if necessary. The experience in this type of case processing is similar to that of filings where owners receive written notification of a service reduction by the tenant, in that in over 40% of the cases, rent reduction orders are issued due to the failure of owners to make repairs. The difference in code red case processing is that because no initial notice is required as a pre-requisite to filing with DHCR, action is taken much more quickly (orders are generally issued within 61 days of filing) when compared to standard processing which requires that the case may only be filed within a time period of 10 to 60 days after a tenant notifies an owner. 12

86 On the other hand, staff analysis shows that based on this pre-letter request, over sixteen percent of the service complaints that tenants try to file are rejected in whole based on the failure to send a pre-letter with another fifteen percent rejected in part where that letter does not raise each service problem upon which a DHCR complaint is then filed or there was another defect with the filing. Approximately seventy-five percent of rejected complaints are never re-filed. While a portion of these cases may have been addressed by the owners, the large percentage of cases granted after owners have been given notice suggests that is not the situation. Staff review of a significant sampling of the rejected complaints has also led to the conclusion that the effect of this rule falls disproportionately on complainants with limited English language proficiency as well as those identified as elderly and infirm. This disproportionate impact unfortunately makes sense, as such tenants are being called upon to navigate a technically dense requirement without the aid and/or intervention of the government as a precondition to obtaining actual government help. Even where such notice is, in DHCR s opinion, appropriately given, there has been some owner movement in actual practice to turn the notice into a strict pleading requirement, to defeat service complaints, on the basis of improper service, or that the tenant failed to use the appropriate legal name for the owner. The proposed DHCR modification still encourages direct owner and tenant interaction to secure repairs and will recognize, as part of its case-by-case processing, that time, if reasonable under the circumstances, may be afforded to owners to provide necessary repairs. However, the continuation of the regulation in its present form is untenable and unconscionable. 13

87 The DHCR amendments also bar those parts of MCI increases that have a future effective date, where there is a subsequently issued service reduction order with an effective date which is prior to the date slated for MCI increase collection. Precluding the collection of these future 6% MCI increments until an outstanding service deficiency is cured, is consistent with the plain language of the RSL, which bars collection of increases where there is a failure to provide services and will aid DHCR in incentivizing prompt restoration of services. Similarly vacancy and longevity increases will no longer be allowed where there is an outstanding service reduction. DHCR s prior position to the opposite effect was consistent with its understanding that a failure to otherwise comply with the RSL did not affect the ability to collect these increases. However, the Appellate Division has now ruled otherwise. See, Bradbury v. 342 West 30 th Street Corporation, 84 A.D.3d 681, 924 N.Y.S.2d 349 (1 st Dept. 2011). j. Deemed Leases The use of deemed leases has an extensive history in overcharge cases and has been used in the past to shield owners from unwarranted overcharge awards where a tenant may not have executed a renewal lease, but remained for the entire term of such lease without eviction and paid the increase attendant on renewal. However, the 2000 codification of the deemed lease rule instead allowed owners to claim that the rule could be used as a sword, to extract the full rent from tenants for a complete lease term where a tenant may have remained only for a short period prior to moving out. The Appellate Division, 2 nd Department, in Samson Mgt. v. Hubert, 92 A.D.3d 932, 939 N.Y.S.2d 138 (2 nd Dept. 2012), found that the 2000 regulatory provision, if it was indeed seeking to give a legal gloss to such behavior, 14

88 would be contrary to law. Hence, DHCR is amending its regulation to conform to the Court s decision in Samson Mgt. v. Hubert and return to the traditional usage of deemed leases. k. Harassment Definition This regulation expands the definition of harassment to reflect some of the more up-todate schemes to deprive tenants of their legitimate rights as rent stabilized tenants. Not every harassing act is designed to create a vacancy, but can include intimidating the tenant in place to preclude the legitimate exercise of such rights. These actions can include false and illegitimate filings before DHCR l. Codification of Certain Four Year Rule Exceptions These provisions seeks to set forth, in one place, a more comprehensive list of areas where, to date, by statute, case law or regulation, the four year rule that ordinarily governs rent and overcharge review, has been held not to be applicable. The list should serve as a useful guide to owners and tenants. The list contains two areas expressly modified by these regulations: preferential rents and vacancy on the base date cases. The needs and benefits for the change with respect to preferential rents have already been explained. As to vacancies, DHCR, prior to this amendment, took the position that if an apartment was vacant or exempt (usually by owner occupancy) on the base date (four years prior to the filing of an overcharge complaint), DHCR was precluded from determining whether the present tenant s rent was legal. Rather than finding the correct rent by calculating what would have been the proper increase for that period, as it would have if the vacancy or exemption was within four years, DHCR would dismiss the complaint. Although this prior 15

89 policy was upheld, experience has demonstrated that this is an area where it is more appropriate to test the validity of a present rent against these usual standards, even if these standards required rental information that occurred before the base date, rather than simply rubber-stamping any rent that is collected. The lack of a proper base date lease (which is what the owner would be asserting) is the identical lack of proof that could otherwise lead to use of the default method in setting the rent. In fact, there have been owners who have inappropriately used the vacancy on base date defense in an effort to defeat such legitimate review. The present rule is not required by statute as the Appellate Division, First Department, has already reviewed information before the base date where there was such a vacancy, but because the owner claimed the rent was now also unregulated, it did not fall within the parameters of what had been the existing regulation. Gordon v. 305 Riverside Corp., 93 A.D.3d 596, 941 N.Y.S.2d 93 (1 st Dept. 2012). There is ongoing litigation over the applicability of the four year rule to Roberts litigation; given that such litigation is still ongoing and not finally determined, it is not contained in this regulation. m. Amended registration and registration requirements Although not provided for by regulation, through its own inaction by not rejecting them, DHCR had allowed owners to file amended registrations at any time for any year. These amendments, if treated similarly to late registrations under the RSL, could carry a substantial penalty, but no penalty has been imposed. The number of such amendments is significant. In 2009, amended registrations for 1,129 buildings representing 5,958 apartments were filed; in 2010, amended registrations for 1,259 buildings representing 8,597 apartments were filed; in 2011, amended registrations for

90 buildings representing 4,579 apartments were filed. The unsupervised inclusion of amendments in the registration system has the effect of corrupting the purpose of DHCR s registration data base as a contemporaneously created history of rents. An amended registration was cited by the Court of Appeals in Grimm v. DHCR, supra, as one of the indicia of a fraudulent scheme to deregulate a housing accommodation. The new DHCR rule would still allow for such amendments, where appropriate, but would ensure that the process was regulated by itself or another governmental agency, and where appropriate, assure there was also notice to the present tenant, who could comment on the owner s rationale for seeking such amendment. DHCR is also amending the registration provisions to appropriately reflect DHCR s authority and ability to change the registration forms themselves each year to capture data appropriate for the administration and enforcement of the RSL and RSC. n. Freeze of Vacancy Bonuses based on Failure to Register This change will conform DHCR s practice to the Court s interpretation of this statutory penalty for failing to properly register. o. Housing Development Fund Companies This provision provides an appropriate rent-setting mechanism for Housing Development Fund Companies upon a foreclosure which are not presently covered by DHCR s deconversion regulations and balances the need for an economic rent with the low income nature of these tenancies. 4. COSTS The regulated parties are residential tenants and the owners of the rent stabilized housing accommodations in which such tenants reside. There are no additional direct costs imposed 17

91 on tenants or owners by these amendments as owner direct costs are capped at $10 per unit per year. The amended regulations do not impose any new program, service, duty or responsibility upon any state agency or instrumentality thereof, or local government. Owners of regulated housing accommodations will need to be initially more vigilant to assure their compliance with these changes. Compliance costs are already a generally-accepted expense of owning regulated housing. There are increased penalties in some instances if the regulations are violated, but the costs of conforming present business practices to the change in standards is not substantial. In addition, these consequences are largely consistent with existing case law or otherwise necessary to secure compliance. DHCR has made a significant effort to assure a safe harbor or alternatives from the more dire consequences for owners who are operating in good faith and in substantial compliance. Tenants will not incur any additional costs through implementation of the proposed regulations. The additional costs need to be weighed against the actual outlay by owners leading to what DHCR is seeking to supervise, monitor, and make more transparent by many of these changes: increases leading to the possible deregulation of units. Imposing rents that approach deregulation thresholds requires a significant outlay of funds on the part of owners. The median rent stabilized rent is $1,107 per month. The median stay of a rent stabilized tenant is 7 to 8 years, based on DHCR s review of turn-over from its registration database. Thus, adding the vacancy bonus and longevity increase to the median rent will result in a rent of $1,288 per month while the amount to deregulate an apartment is a rent of $2,500. This means an owner must increase the rent through the installation of individual apartment improvements costing either $72,880 or $42,420, depending on the number of units in the building. This financial outlay stands in contrast to the median family income of a rent 18

92 stabilized tenancy of $37,000 per year and mean family income of $51,357 per year as reported by NYC Rent Guidelines Board. 5. LOCAL GOVERNMENT MANDATES The proposed rule making will not impose any new program, service, duty or responsibility upon any level of local government. 6. PAPERWORK The amendments may, in a limited fashion, increase the paperwork burden. There will be additional costs associated with filings and the need for additional record retention, but it is relatively minimal. The filing of exit notices and registrations and the use of proper lease riders are already part of the RSL. Serving final registrations is an extremely limited cost and registration has otherwise been an annual owner cost since 1984 for these housing accommodations. There may be more instances where an owner may need to retain proof of the legality of rent for a longer period, but a prudent owner would already retain that information for other purposes, such as assuring that an increase was not part of a fraudulent scheme to deregulate an apartment, making sure leases were offered on the same terms and conditions, assuring that a preferential rent was correct, and to resolve possible jurisdictional disputes. Any particularized specific claims that a changed regulation may create hardship or inequity can and will be best handled in the context of the administrative applications, themselves, where such factual claims can be assessed. IG Second Generation Partners, L.P. v. DHCR, 10 N.Y.3d 474, 859 N.Y.S.2d 598 (2008) 19

93 7. DUPLICATION The amendments do not add any provisions that duplicate any known State or Federal requirements except to the extent required by law. There are instances where a rent stabilized property participates in another State, city or Federal housing program. In those instances, there may be a need to comply with the RSC requirements as well as the mandates of that city, State or Federal program. 8. ALTERNATIVES DHCR considered a variety of alternatives to many of these new rules. As set forth in part in the Needs and Benefits section, the alternatives of continuing the rule presently in place for all of these changes were considered and rejected. There were other alternatives suggested as part of DHCR s outreach that were reviewed initially as part of DHCR s initial deliberative process, but were rejected. For example: DHCR considered treating any attempt to amend registrations as the equivalent of late registration, since it nullifies the previous timely filing. However, this blanket penalty gave way to a more nuanced procedure to allow review of the reasons for amendments and to make amendments subject to review and supervision. DHCR considered creating more stringent pre-requirements for MCI filings with respect to violation clearance. However, in leaving those other building violations to service reductions, while tightening up procedures to assure the clearance of immediately hazardous violations, DHCR sought to strike a balance between the need to assure owner compensation for building improvements and the maintenance of already existing services. 20

94 DHCR considered the implementation of more severe penalties for notice violations with respect to exit registrations and the provision of the lease rider. Rather than create a blanket denial of increases, DHCR made the consequences act in lock step with regular registration penalties to assure that a paperwork failure, in and of itself, would not lead to an excessive penalty, if the rent was otherwise legal and proper. However, continuation of the present rule, which required as a precondition to any penalty for failing to provide a rider that the tenant obtain an order from DHCR directing that such a rider be provided, was not a real option. The purpose of the rider is to advise tenants of their rent stabilized rights and to allow them to make an informed decision as to whether the invocation of DHCR s intercession to obtain those rights is necessary. This precondition, by definition, limits penalties for failing to provide a rider only to those tenants already sufficiently savvy about their rights to already know them. It also effectively limits an owner s necessary compliance with lease rider requirements to the same subset of knowledgeable tenants, thus assuring that the purpose of the rider is effectively gutted by regulation. 9. FEDERAL STANDARDS The proposed amendments do not exceed any known minimum Federal standards. 10. COMPLIANCE SCHEDULE It is not anticipated that regulated parties will require any significant additional time to comply with the proposed rules. 21

95 CONSOLIDATED - RURAL AREA FLEXIBILITY ANALYSIS The Rent Stabilization Code applies exclusively to New York City, and therefore, the proposed rules will not impose any reporting, recordkeeping, or other compliance requirements on public or private entities located in any rural area pursuant to Subdivision 10 of SAPA Section 102.

96 CONSOLIDATED - REGULATORY FLEXIBILITY ANALYSIS (FOR SMALL BUSINESSES AND LOCAL GOVERNMENTS) 1. EFFECT OF RULE The Rent Stabilization Code ( RSC ) applies only to rent stabilized housing units in New York City. The class of small businesses affected by these proposed amendments would be limited to certain small property owners, who own limited numbers of rent stabilized units. The amended regulations would have limited burdensome impact on such businesses. These amendments to the RSC, which apply exclusively in New York City, are expected to have no impact on the local government thereof. 2. COMPLIANCE REQUIREMENTS The proposed amendments would require small businesses that own regulated residential housing units to perform some minimal additional recordkeeping or reporting. Such businesses will continue to need to keep records of rent increases and improvements made to the properties in order to qualify for rent increases authorized under the proposed changes, but in addition to keeping such records, will also be required in vacancy and renewal lease riders to provide such records to the tenant. In addition, rent increases will not be permissible until the proper lease rider is provided to the tenant. The rent would be frozen based on such failure if the rent is otherwise illegal. Further, such businesses will be required to provide a valid explanation for the need to amend registration statements already filed with DHCR. The proposed 1

97 amendment of the registration statements must also be provided to the tenant in occupancy and would generally require the owner to provide DHCR an explanation of the need for such amendment. In addition, small businesses will be required to produce rental records prior to the four year review of rental records in circumstances where there is a finding of a fraudulent scheme to deregulate an apartment; where there is a preferential rent in order to establish the terms and conditions of such preferential rent and whether it was previously established; and where an apartment was vacant or temporarily exempt on the base date. While these businesses may need to retain proof of the legality of rent for a longer period and produce such to DHCR, a prudent business owner would already have retained that information for these purposes already based on existing case law. Such businesses will also be required to file an exit registration with DHCR when an apartment is deregulated and required to serve such on the tenant who resides in the apartment that the business asserts is no longer subject to regulation. The exit registrations themselves give these businesses a contemporaneous benchmark which will aid them in legitimate efforts to contemporaneously establish the propriety of high rent/vacancy deregulation and help them defend against claims by tenants that such deregulations are part of fraudulent scheme as defined by the Court of Appeals in Grimm v DHCR, 15 N.Y.3d 358, 912 N.Y.S.2d 491 (1 st Dept. 2010). This requirement has also been statutory since Businesses for a very limited time period will also be required to provide additional information directly to tenants with respect to explaining the propriety of 2

98 IAI charges comprising the rent as a new lease. However, since the purpose of this is to cut down on rent overcharge proceedings before DHCR and the court, it may be ultimately more cost effective than waiting on administrative or judicial proceedings to supply the information. 3. PROFESSIONAL SERVICES The proposed amendments will not require small businesses to obtain any new or additional professional services. Many businesses do use a professional service to file and serve their annual registrations. Even if the filing of a rent registration was considered a new requirement, as explained in the Regulatory Impact Statement, the cost is comparatively minimal. 4. COMPLIANCE COSTS There is no indication that the proposed amendments will impose any significant, initial costs upon small businesses. There are no additional direct costs imposed on these businesses by these amendments as owner direct costs are capped at $10 per unit per year. Small business owners of regulated housing accommodations will need to be initially more vigilant to assure their compliance with these changes. Compliance costs are already a generally-accepted expense of owning regulated housing. There are increased penalties in some instances if the regulations are violated, but the costs of conforming present business practices to the change in standards is not substantial. In addition, these consequences are largely consistent with existing case law or otherwise necessary to secure compliance. DHCR has made a significant effort to assure a safe harbor or alternatives from the more dire 3

99 consequences for owners who are operating in good faith and in substantial compliance. The additional costs need to be weighed against the actual outlay by owners leading to what DHCR is seeking to supervise by many of these changes: increases leading to the possible deregulation of units. Imposing rents that approach deregulation thresholds requires a significant outlay of funds on the part of owners. The median rent stabilized rent is $1,107 per month. The median stay of a rent stabilized tenant is 7 to 8 years based on DHCR s review of turn over from its registration database. Thus adding the vacancy bonus and longevity increase to the median rent will result in a rent of $1,288 per month while the amount to deregulate an apartment is a rent of $2,500. This means an owner must increase the rent through individual apartment improvements through installation of improvements costing either $72,880 or $42,420 depending on the number of units in the building. This financial outlay stands in contrast to the median family income of a rent stabilized tenancy of $37,000 per year and mean family income of $51,357 per year as reported by New York City Rent Guidelines Board. The amended regulations do not impose any new program, service, duty or responsibility upon any state agency or instrumentality thereof, or local government. 5. ECONOMIC AND TECHNOLGICAL FEASIBILITY Compliance is not anticipated to require any unusual, new or burdensome technological applications but ultimately encourages the use of online filings and use of DHCR forms, which are increasingly online, which will actually reduce costs. 4

100 6. MINIMIZING ADVERSE IMPACT The proposed regulations have no adverse impact on local government. They will have comparatively minimal costs to businesses considering that these changes are necessary to enforce a statute designed to protect the public health safety and welfare. The regulations being implemented do not create different regulatory standards for small businesses. Instead DHCR in the administrative proceedings themselves can take equitable circumstances into consideration which may include the size of the business. It is difficult, on a blanket regulatory basis, to make exceptions for small businesses. Outside of the proceedings themselves, it is difficult to ascertain the size of the business subject to these regulations as a single business may own multiple properties often created as single asset corporations. However, as set forth in the Regulatory Impact Statement, the new rules recognize a variety of mitigating circumstances, safe harbors and curative provisions so that an otherwise legally compliant owner suffers minimal or no penalties for a paperwork omission error. To the extent the approaches suggested in SAPA section 202-b are otherwise appropriate, present procedures take these into account. 7. SMALL BUSINESS AND LOCAL GOVERNMENT PARTICIPATION DHCR personnel within its Office of Rent Administration (ORA) engages in close to one hundred forums and meetings on an annual basis with community groups, owner and tenant advocacy organizations and local officials where the administration and implementation of these provisions was under discussion. In the last year this information gathering process has been enhanced through several additional actions taken by DHCR. 5

101 DHCR created the Tenant Protection Unit (TPU) a unit designated by the Commissioner to investigate and prosecute violations of the ETPA, the RSL and the City and State Rent Laws. TPU itself has met with the various stakeholders in an effort to ascertain what issues and concerns impinge on the owner and tenant community affected by these regulations. Further, DHCR held a public hearing on the implementation of regulations to conform to the changes in the rent laws enacted by the 2011 Law at which many of these provisions were raised by commenters as suggested changes and ORA subsequently sent outreach letters to stakeholders, specifically including small businesses and their advocates, seeking comments and suggestions on changes to the regulations. Finally, the Rent Stabilization Law specifically provides for review by the New York City Department of Housing Preservation and Development prior to promulgation. 6

102 CONSOLIDATED - JOB IMPACT STATEMENT It is apparent from the text of the rules, required by statutory amendment, that there will be no adverse impact on jobs and employment opportunities by the promulgation of these regulations.

103 Executive Order No. 17 Local Government Mandate Evaluation Impact on Local Government and Property Taxpayers Submitting Agency: DHCR NYCRR Citation: 9 NYCRR (o); (u); ; (b), (c); (a)(3)(22); (a)(13); (d)(3)(iii); (c)(1); (c)(3); (b); (a)(1), (a)(2), (c), (d)(2); (c)(2), (c)(3); (a), (e), (g); ; (a)(2); (a)(3)(iii); (g); ; ; (a); ; ; Description of the Regulation: The proposed regulations codify the addition of the Tenant Protection Unit; codify exit registrations, provide an appropriate rent setting mechanism for HDFCs upon a foreclosure; remove language preserving preferential rents solely through registrations; remove submetering costs as eligible for MCI increases and allow DHCR to independently review C violations to deny MCI applications; add enhanced DRIE and SCRIE protections; increase requirements for lease rider with additional explanation of rent increases and the ability of tenants to demand supporting documentation, and provide for a rent freeze for failure to provide the lease rider or supporting documentation unless the rent would otherwise be legal; codify the default formula for rent setting with an alternative fourth method; remove service complaint pre-notice as a basis for dismissal of a complaint, reduce time for owners to respond to a service complaint, prevent 6% MCI increases from being collected after a service reduction order, and bar vacancy bonuses after a service reduction order; conform deemed lease provision to case law; redefine harassment to include certain false filings intended to deprive tenants of continued rent stabilized protections; codify exceptions to four year statute of limitations; require DHCR or other government approval for amended registrations if not amended within appropriate filing year; clarify that a rent freeze due to failure to register includes vacancy bonuses; add five days for mailing of certain notices, exclude additional five days for mailing of other papers and notices not already specified, and clarify that Article 78 statute of limitations runs from date of mailing of DHCR order. Statutory Authority for the Regulation: The Administrative Code of the City of New York and Section 44 of Chapter 97, Part B of the Laws of 2011 enable DHCR to amend the Rent Stabilization Code. Agency Contact: Gary R. Connor General Counsel Telephone: (212) gconnor@nyshcr.org 1. Does the regulation impose a mandate on a county, city, town, village, school district or special district that requires such entity to: a. Provide or undertake any program, project or activity; Yes No X

104 b. Increase spending for an existing program, project or activity (even if such program, project or activity is voluntarily undertaken by a local government unit); Yes No c. Grant any new property tax exemption, or broaden the eligibility or increase the value of any existing property tax exemption; or Yes No d. Carry out a legal requirement that would likely have the effect of raising property taxes. Yes No If the answer to all questions above are no, ensuring the regulation will not result in a mandate on local governments and property taxpayers, an accounting and the approval of the Office for Taxpayer Accountability are not required. If the answer to any question above is yes, and the regulation may have a fiscal impact on local governments and property taxpayers, please proceed to items Is the mandate required by federal law or regulation or state law? Yes No a. If yes, please cite the specific provision in the statute or federal regulation. b. If yes, please describe any elements of the regulation not specifically mandated by the statute or regulation. 3. If any portion of the mandate is not required by federal or state law, please attach to this Checklist an Accounting for such portion containing:* a. A description of the mandate in the regulation; b. An accounting of the impacts of such mandate that includes: (i) A fiscal impact statement; (ii) A cost-benefit analysis, which includes: (x) a specific delineation of the costs and benefits to local governments and property taxpayers; and (y) a quantification of the impact on local government revenue and expenditures, where such impact is quantifiable based on available

105 information (please consult with the Governor s Office of Regulatory Reform if further guidance is needed); c. A description of input sought and received from affected local governments; d. A description of the proposed revenue sources to fund such mandate; and e. An explanation as to why this regulation should be advanced with a mandate. *Note: The Regulatory and Flexibility Analysis for Small Businesses and Local Governments may be attached so long as the items set forth in 3 above are fully accounted for in the Analysis.

106 Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Adm... file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 1 of 8 12/4/2014 Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin NY Slip Op [15 NY3d 358] October 19, 2010 Ciparick, J. Court of Appeals Published by New York State Law Reporting Bureau pursuant to Judiciary Law 431. As corrected through Wednesday, December 8, 2010 [*1] In the Matter of Sylvie Grimm, Respondent, v State of New York Division of Housing and Community Renewal Office of Rent Administration, Appellant. 151 Owners Corp., Intervenor-Appellant. Argued September 13, 2010; decided October 19, 2010 Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 68 AD3d 29, affirmed. {**15 NY3d at 362} OPINION OF THE COURT Ciparick, J. On this appeal, we are asked to determine whether the rationale employed in Thornton v Baron (5 NY3d 175 [2005]), which allowed the parties to look back farther than four years, applies in a situation where it is alleged that the standard base date rent is tainted by [*2] fraudulent conduct on the part of a landlord. We conclude that it does, and that such base date rent may not be used as a basis for calculating subsequent regulated rent if fraud is indeed present. I. In 1999, prior to the tenancy of petitioner Sylvie Grimm, the rent-stabilized apartment at issue here was registered with the Division of Housing and Community Renewal (DHCR) at a monthly rent of $ In 2000, upon a vacancy in the apartment, rather than using the

107 Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Adm... file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 2 of 8 12/4/2014 required rent-setting formula to determine the rent that it could legally charge the next tenants of the apartment, the owner notified prospective tenants that the rent for the subject apartment was $2,000 per month. However, the owner informed the prospective tenants that, if they agreed to make certain repairs and improvements to the apartment at their own expense, the rent would be reduced to{**15 NY3d at 363} $1,450. Both sums were unlawful because of the rent-stabilized status of the apartment. The tenants accepted the offer, and signed a written lease agreement without a rent-stabilized lease rider. The owner apparently did not provide those tenants with a statement showing the apartment was registered with DHCR. In 2004, petitioner moved into the apartment, agreeing to the rental rate of $1,450. Her initial lease did not specify that the apartment was rent stabilized. Thereafter, in July 2005, petitioner filed a rent overcharge complaint with DHCR. The landlord, intervenor 151 Owners Corp., soon after receiving the overcharge complaint, sent petitioner revised versions of her 2004 and 2005 leases which advised that the apartment was subject to rent stabilization. In its answer to the overcharge complaint, 151 Owners Corp. admitted that the apartment had not been registered with DHCR since At the same time it filed the answer to the overcharge complaint, 151 Owners Corp. filed registration statements with DHCR for the years 2001 through In an order dated June 21, 2006, the DHCR Rent Administrator denied petitioner's overcharge complaint on the ground that the rent on the "base date" i.e., the date four years prior to the filing of the complaint was $1,450, and the rent adjustments subsequent to the base date had been lawful. The Rent Administrator did not address the issue whether the registration statement in effect on the base date was reliable or set forth a lawful rent. DHCR denied petitioner's request for administrative review of the Rent Administrator's determination, and denied her request for reconsideration. Petitioner thereafter commenced this CPLR article 78 proceeding challenging DHCR's determination denying administrative review. The petition sought (1) a declaration that she was the legal rent-stabilized tenant of the apartment and (2) remand to DHCR "with the direction that the rent for the subject apartment should be frozen at the 1999 amount, because the [*3]owner failed to register the subject apartment for 2000, and computing the rent overcharge amount."

108 Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Adm... file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 3 of 8 12/4/2014 Supreme Court granted the petition, vacated DHCR's determination and "remanded [the matter]... for reconsideration in accordance with [the court's] decision" (2007 NY Slip Op 34184[U], *5). Supreme Court noted that DHCR's determination simply calculated the rent by assuming, without actually determining, that the registration in effect on the base date was {**15 NY3d at 364} reliable. The court also noted that DHCR did not specifically reject petitioner's allegations of fraud. The court reasoned, under Thornton v Baron (5 NY3d 175, 181 [2005]), that DHCR's failure to consider petitioner's allegations of fraud and the reliability of the rent charged on the base date warranted remand to the agency for de novo review of the overcharge complaint. DHCR and 151 Owners Corp. separately appealed. The Appellate Division affirmed, with two Justices dissenting (Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 68 AD3d 29 [1st Dept 2009]). The court reasoned: "Given the specific facts of this case, DHCR should not be allowed to turn a blind eye to what could be fraud and an attempt by the landlord to circumvent the Rent Stabilization Law... "[W]here, as here, there is an indication of possible fraud that would render the rent records unreliable, it is an abuse of discretion for DHCR not to investigate it" (id. at 33). The two dissenting Justices voted to reverse and "would [have found] that [DHCR] acted rationally in complying with the legislative intent expressed in the statute of limitations set forth in CPLR 213-a and [the] Rent Stabilization Law" (id. at 34 [Buckley, J., dissenting]). DHCR and 151 Owners Corp. appealed by permission of the Appellate Division, which certified the following question: "Was the order of Supreme Court, as affirmed by this Court, properly made?" We now affirm and answer the certified question in the affirmative. II. As we have previously explained, rent overcharge claims are generally subject to a fouryear statute of limitations. Specifically, Rent Stabilization Law of 1969 (Administrative Code of City of NY) (hereinafter Rent Stabilization Law), as amended by the Rent Regulation Reform Act (RRRA) of 1997, states: "[A] complaint under this subdivision shall be filed with [DHCR] within four

109 Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Adm... file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 4 of 8 12/4/2014 years of the first overcharge alleged and no determination of an{**15 NY3d at 365} overcharge and no award or calculation of an award of the amount of an overcharge may be based upon an overcharge having occurred more than four years before the complaint is filed... This paragraph shall preclude examination of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this subdivision" (Rent Stabilization Law [a] [2]; see also CPLR 213-a). [*4]The RRRA "clarified and reinforced the four-year statute of limitations applicable to rent overcharge claims... by limiting examination of the rental history of housing accommodations prior to the four-year period preceding the filing of an overcharge complaint" (Thornton, 5 NY3d at 180, citing Matter of Gilman v New York State Div. of Hous. & Community Renewal, 99 NY2d 144, 149 [2002]; see also Matter of Cintron v Calogero, 15 NY3d 347 [2010] [decided today]; Governor's Approval Mem, Bill Jacket, L 1997, ch 116). To effectuate the purpose of the four-year limitations period, in rent overcharge cases DHCR regulations, as relevant here, set the "legal regulated rent" as the rent charged on the "base date," which is the "date four years prior to the date of the filing of [the overcharge] complaint" plus any subsequent lawful increases (9 NYCRR [e], [f] [1]; [a] [3] [i]). The four-year limitations period was explained in our decision in Thornton (5 NY3d 175 [2005]), where we held that a lease provision purporting to exempt an apartment from the Rent Stabilization Law in exchange for an agreement not to use the apartment as a primary residence was void as against public policy (see id. at ). Our ruling was made in connection with a scheme between a landlord and an illusory tenant to agree that an apartment would not be used as the named tenant's primary residence, resulting in the elimination of the rent-stabilized status of the apartment. Acknowledging that the apartment's prior rental history could not be examined, and that the stabilized rent before the fraudulent scheme was of no relevance, we nonetheless rejected the owner's contention that "the legal regulated rent should be established by simple reference to the rental history" on the date four years prior to the commencement of the overcharge action (id. at ). We explained that the lease was "void at its inception" because its "circumvent[ion of] the Rent Stabilization Law" violated public policy (id. at 181). As a result, the rent registration statement in effect on the base date "listing this illegal rent was also a{**15 NY3d at 366} nullity" (id.). Rather than using the registration statement to ascertain the rent on the base date, we instructed DHCR to use the so-called default formula to calculate the rent on the

110 Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Adm... file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 5 of 8 12/4/2014 base date, as it does when no reliable records are available (see id.; see also Levinson v 390 W. End Assoc., L.L.C., 22 AD3d 397, [1st Dept 2005]). [FN1] DHCR contends that our holding in Thornton should be constrained to the narrow set of circumstances described in that case and that we should limit its application to cases involving illusory tenancies. We disagree and conclude that, where the overcharge complaint alleges fraud, as here, DHCR has an obligation to ascertain whether the rent on the base date is a [*5]lawful rent. Accordingly, here, as the Appellate Division concluded, DHCR acted arbitrarily and capriciously in failing to meet that obligation where there existed substantial indicia of fraud on the record. In particular, here it is alleged that the tenants immediately preceding petitioner paid significantly more than the previously registered rent, and were not given a rent-stabilized lease rider. [FN2] Moreover those tenants were informed that their rent would be higher but for their performance of upgrades and improvements at their own expense. Almost simultaneously with the substantial increase in the rent for the affected unit, the owner ceased filing annual registration statements (see Rent Stabilization Code [9 NYCRR] [a] [requiring annual registration statements be filed with DHCR]) and later filed several years' registration statements retroactively after receiving petitioner's overcharge complaint. Finally, petitioner's initial lease did not contain a rent-stabilized rider. The combination of these factors should have led DHCR to investigate the legality of the base date rent, rather than blindly using the rent charged on the date four years prior to the filing of the rent overcharge claim. Our holding should not be construed as concluding that fraud exists, or that the default formula should be used in this case.{**15 NY3d at 367} Rather, we merely conclude that DHCR acted arbitrarily in disregarding the nature of petitioner's allegations and in using a base date without, at a minimum, examining its own records to ascertain the reliability and the legality of the rent charged on that date. DHCR also argues that, under the Appellate Division's holding, any "bump" in an apartment's rent even those authorized without prior DHCR approval, such as rent increases upon installation of improvements to an apartment (see Rent Stabilization Law [c] [13]) will establish a colorable claim of fraud requiring DHCR investigation. Again, we disagree. Generally, an increase in the rent alone will not be sufficient to establish a

111 Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Adm... file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 6 of 8 12/4/2014 "colorable claim of fraud," and a mere allegation of fraud alone, without more, will not be sufficient to require DHCR to inquire further. What is required is evidence of a landlord's fraudulent deregulation scheme to remove an apartment from the protections of rent stabilization. As in Thornton, the rental history may be examined for the limited purpose of determining whether a fraudulent scheme to destabilize the apartment tainted the reliability of the rent on the base date. [*6] In sum, the Appellate Division correctly applied Thornton to this rent overcharge proceeding and properly concluded that DHCR has an obligation to ascertain whether petitioner's allegations of fraud warrant the use of the default formula when calculating any rent overcharge that may have occurred. Accordingly, the order of the Appellate Division should be affirmed, with costs, and the certified question answered in the affirmative. Smith, J. (dissenting). In Thornton v Baron (5 NY3d 175 [2005]) and Matter of Cintron v Calogero (15 NY3d 347 [2010] [decided today]), the Court carved out exceptions to the command of the Rent Regulation Reform Act of 1997 that a rent charged more than four years before a tenant complains may not be considered in deciding an overcharge claim. But in this case, the majority goes far beyond making an exception. The majority has, in substance, largely repealed the statute or, perhaps, has turned it into a source of endlessly complex litigation. I am not sure which it has done, and I am not sure which is worse. The statute and the regulations implementing it are unequivocal.{**15 NY3d at 368} "[N]o determination of an overcharge and no award or calculation of an award of the amount of an overcharge may be based upon an overcharge having occurred more than four years before the complaint is filed.... This paragraph shall preclude examination of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this subdivision" (Rent Stabilization Law [RSL] of 1969 [Administrative Code of City of NY] [a] [2]; see also id [a] ["Where the amount of rent set forth in the annual rent registration statement filed four years prior to the most recent registration statement is not challenged within four years of its filing, neither such rent nor service of any registration shall be subject to challenge at any time thereafter"]; Rent Stabilization Code [9 NYCRR] [a] [2]). Thornton and Cintron presented special situations in which, for understandable reasons, a majority of the Court decided that this language should not be taken literally. Thornton involved an elaborate fraudulent scheme, in which illusory leases containing false

112 Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Adm... file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 7 of 8 12/4/2014 representations were created, collusive lawsuits brought and a court misled into entering orders that made it possible to collect illegal rents; the Court held that such an extreme form of misconduct should not be protected by the four-year time bar. Cintron presented the problem of how to reconcile the four-year limitation with another section of the statute providing for rent reduction orders of indefinite duration. But this is a garden-variety overcharge case perhaps the paradigm of the situation for which the four-year limitation was intended. The landlord charged an illegal rent, and the illegality went undetected for more than four years. The statute says plainly that in such a [*7]case, the rent charged four years previously shall not be subject to challenge. But the majority holds that a challenge is allowed. The majority's justification for this result is that "the overcharge complaint alleges fraud" and that there are "indicia of fraud" consisting essentially of allegations that the landlord lied to previous tenants about what the legal maximum rent was (majority op at 366). In other words, the majority seems to equate "fraud" with a wilful overcharge as though the{**15 NY3d at 369} four-year limit were applicable only to landlords who overcharge by mistake. In fact, the statute contains its own remedy for wilful overcharges: treble damages (RSL [a]). It does not make the four-year limitation inapplicable in wilful overcharge cases cases which, as the Legislature certainly knew, are a large number of the cases to which the limitation on its face applies. The majority seemingly tries to temper its holding by saying that "an increase in the rent alone will not be sufficient to establish a 'colorable claim of fraud' " and that "a mere allegation of fraud alone, without more, will not be sufficient to require DHCR to inquire further" (majority op at 367). But obviously it does not take much "more" than an allegation of fraud there is practically nothing more in this case. The majority adds that what DHCR is supposed to "inquire" about is whether there was a "fraudulent scheme to destabilize the apartment" (id.). It does not say what it takes to prove such a "fraudulent scheme." Simply a wilful overcharge? A wilful overcharge coupled with the hope that the overcharge will eventually result in the apartment's escape from rent stabilization? If the majority opinion does not simply nullify the four-year limit in every case where the overcharge was not a good faith error, it requires DHCR to undertake an inquiry that the majority leaves wholly undefined. And what if DHCR's inquiry shows that, though there was

113 Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Adm... file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 8 of 8 12/4/2014 a wilful overcharge, there was no "fraudulent scheme"? Does this mean that, if the landlord has been charging an illegal rent for more than four years, it may continue to do so? The majority opinion can be read to mean either that the four-year limitation has largely ceased to exist, or that any case to which the limit applies on its face must lead to a minilitigation, in which DHCR tries to figure out whether the overcharge was "fraudulent" enough to escape the time limit. If the former, the majority has simply tossed aside the Legislature's command. If the latter, I do not envy DHCR its task. Chief Judge Lippman and Judges Pigott and Jones concur with Judge Ciparick; Judge Smith dissents in a separate opinion in which Judges Graffeo and Read concur. Order affirmed, etc. Footnotes Footnote 1: The default formula "uses the lowest rent charged for a rent-stabilized apartment with the same number of rooms in the same building on the relevant base date" (Thornton, 5 NY3d at 180 n 1; Levinson, 22 AD3d at ). Footnote 2: The Rent Stabilization Code requires that, for each vacancy or renewal lease for premises subject to the Rent Stabilization Code, the landlord "shall furnish to each tenant signing a vacancy or renewal lease, a rider in a form promulgated or approved by the DHCR, in larger type than the lease, describing the rights and duties of owners and tenants as provided for under" the Rent Stabilization Law (Rent Stabilization Code [9 NYCRR] [c] [1]).

114 938 N.E.2d 931 Page 1 15 N.Y.3d 347, 938 N.E.2d 931, 912 N.Y.S.2d 498, 2010 N.Y. Slip Op (Cite as: 15 N.Y.3d 347, 938 N.E.2d 931, 912 N.Y.S.2d 498) Court of Appeals of New York. In the Matter of Oscar CINTRON, Appellant, v. Judith A. CALOGERO, as Commissioner of the Division of Housing and Community Renewal of the State of New York, Respondent. Oct. 19, Background: Tenant commenced article 78 proceeding seeking to annul final order of Division of Housing and Community Renewal (DHCR) insofar as it limited rent overcharges recoverable by tenant to four years prior to filing of overcharge complaint, and limited treble damages to two years prior to filing of complaint. The Supreme Court, Bronx County, Sallie Manzanet, J., denied petition. Tenant appealed. The Supreme Court, Appellate Division, 59 A.D.3d 345, 874 N.Y.S.2d 76, affirmed. Tenant appealed. Holding: The Court of Appeals, Ciparick, J., held that DHCR could consider rent reduction orders entered outside of four-year limitations period in determining amount of overcharge. Reversed and remitted. Smith, J., filed dissenting opinion. West Headnotes [1] Landlord and Tenant (3) 233 Landlord and Tenant 233IX Regulated Rents 233IX(C) Prohibited Landlord Conduct 233k1945 Proceedings 233k1950 Evidence 233k1950(3) k. Admissibility. Most Cited Cases (Formerly 233k200.75) Division of Housing and Community Renewal (DHCR) should, in calculating any rent overcharge, honor rent reduction orders that, while issued prior to four-year limitations period, remained in effect during that period. McKinney's CPLR 213 a; New York City Administrative Code, (a)(2). [2] Landlord and Tenant Landlord and Tenant 233IX Regulated Rents 233IX(C) Prohibited Landlord Conduct 233k1945 Proceedings 233k1948 k. Time to sue and limitations. Most Cited Cases (Formerly 233k200.72) Purpose of the four-year limitations or lookback period for rent overcharge claims is to alleviate the burden on honest landlords to retain rent records indefinitely. McKinney's CPLR 213 a; New York City Administrative Code, (a)(2). [3] Landlord and Tenant Landlord and Tenant 233IX Regulated Rents 233IX(A) Regulation of Rents in General 233IX(A)4 Adjustment of Rent 233k1903 Grounds for Adjustment 233k1906 k. Changes in facilities or services. Most Cited Cases (Formerly 233k200.57) Rent reduction orders place continuing obligation upon owner to reduce rent until required services are restored or repairs are made. New York City Administrative Code, [4] Landlord and Tenant (3) 233 Landlord and Tenant 233IX Regulated Rents 233IX(C) Prohibited Landlord Conduct 233k1945 Proceedings 233k1950 Evidence 233k1950(3) k. Admissibility. Most 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.

115 938 N.E.2d 931 Page 2 15 N.Y.3d 347, 938 N.E.2d 931, 912 N.Y.S.2d 498, 2010 N.Y. Slip Op (Cite as: 15 N.Y.3d 347, 938 N.E.2d 931, 912 N.Y.S.2d 498) Cited Cases (Formerly 233k200.75) Rent reduction orders impose continuing obligation on landlord and, if still in effect during fouryear look-back period, are in fact part of rental history which Division of Housing and Community Renewal (DHCR) must consider in evaluating tenant's overcharge complaint. McKinney's CPLR 213 a; New York City Administrative Code, (a)(2). [5] Landlord and Tenant (3) 233 Landlord and Tenant 233IX Regulated Rents 233IX(C) Prohibited Landlord Conduct 233k1945 Proceedings 233k1950 Evidence 233k1950(3) k. Admissibility. Most Cited Cases (Formerly 233k200.75) Rent Stabilization Law permitted Division of Housing and Community Renewal (DHCR) to consider rent reduction orders entered outside of fouryear limitations period applicable to tenant's rent overcharge claim in determining amount of overcharge, where those orders remained in effect during the limitations period. McKinney's CPLR 213 a ; New York City Administrative Code, (a)(2). ***499 BAS Legal Advocacy Program, Inc., Bronx (Randolph Petsche of counsel), for appellant. Gary R. Connor, General Counsel, New York State Division of Housing and Community Renewal, New York City (Martin B. Schneider of counsel), for respondent. South Brooklyn Legal Services, Brooklyn (John C. Gray, Edward Josephson and Pavita Krishnaswamy of counsel) and Queens Legal Services, Jamaica (Heejung Kook of counsel), for Pratt Area Community Council and others, amici curiae. Legal Aid Society, Brooklyn (Steven Banks, Patrick J. Langhenry, Stephen Myers and Jamila Wideman of counsel), for Met Council, Inc., amicus curiae. *351 **932 OPINION OF THE COURT CIPARICK, J. [1] On this appeal, we are asked to interpret the Rent Stabilization Law to ascertain the consequences on a current rent overcharge claim of two rent reduction orders issued prior to, but in effect during, the four-year period preceding the filing of an overcharge claim. We conclude that the Division of Housing and Community Renewal ( DHCR) should, in calculating any rent overcharge, honor rent reduction orders that, while issued prior to the four-year limitations period, remained in effect during that period. I. In 1986, petitioner Oscar Cintron became a tenant of 2975 Decatur Avenue, apartment 5C, in the Bronx, at an initial stabilized rent of $ per month. The following year, petitioner filed a complaint with DHCR against the building's then owner, alleging a decrease in services related to, among other things, the apartment's refrigerator, door lock and fire escape window. As a result of the complaint, DHCR issued an order reducing petitioner's rent by the percentage of the most recent guidelines adjustment for the tenant's lease which commenced before the effective date of th[e] rent reduction [order], and providing that the owner could not collect any rent *352 increase until a rent restoration order was issued. The rent reduction order did not set a particular level of rent. According to petitioner, the 1987 rent reduction order should have resulted in a reduction of his rent to $ per month. In 1989, petitioner filed another complaint with DHCR, alleging a roach infestation of the apartment's stove. DHCR issued another rent reduction order. Despite the 1987 and 1989 rent reduction orders, however, the owner failed to make any repairs and continued to charge petitioner the unreduced 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.

116 938 N.E.2d 931 Page 3 15 N.Y.3d 347, 938 N.E.2d 931, 912 N.Y.S.2d 498, 2010 N.Y. Slip Op (Cite as: 15 N.Y.3d 347, 938 N.E.2d 931, 912 N.Y.S.2d 498) rent. In 1991, when the current owner purchased the building, petitioner allegedly advised him of the rent reduction orders. Although the current owner apparently also failed to make any repairs, petitioner continued to pay the unreduced rent and entered into a series of leases requiring him to pay greater rents. On December 11, 2003, petitioner filed a complaint alleging that the rent of $ **933 ***500 charged in the lease then in effect constituted an overcharge based on the current and prior owners' failure to comply with the 1987 and 1989 rent reduction orders. A DHCR Rent Administrator determined that the base date to be used was the date four years prior to the filing of the overcharge complaint December 11, 1999 and established that the legal regulated rent on the base date was $508.99, which was the rent charged by the current owner and paid by petitioner on that date. Although taking notice of the 1987 and 1989 rent reduction orders, the Rent Administrator in establishing the legal stabilized rent calculated the overcharge using the base date of December 11, The Rent Administrator awarded petitioner a rent refund of $1,008.77, which included interest but did not include treble damages, and prospectively froze the rent at the base date level from December 11, 1999 until February 1, Effective February 1, 2004, the Rent Administrator removed the 1987 and 1989 rent reduction orders and restored the rent to the full amount of $579.99, which included rent increases. Petitioner sought administrative review of the Rent Administrator's order. DHCR granted the petition for administrative review to the extent of modifying the order by (1) reversing the portion of the order that denied treble damages and (2) awarding treble damages beginning two years prior to the filing of the overcharge complaint. DHCR denied the remainder of petitioner's challenges, concluding that the Rent Administrator properly limited recovery to the four years preceding the overcharge *353 complaint and correctly used the base date rent $ as of December 11, 1999 rather than the rent established by the 1987 and 1989 rent reduction orders in calculating the overcharge. Petitioner commenced this CPLR article 78 proceeding seeking to annul DHCR's order. Supreme Court denied the petition and dismissed the proceeding, concluding that DHCR's determination was not arbitrary or capricious and had a rational basis. On petitioner's appeal, the Appellate Division affirmed, holding: The order, finding the base rent date to be December 11, 1999 (four years prior to the filing of the overcharge complaint), establishing the legal base rent as the amount paid on that date, freezing that rent until February 1, 2004, during which time rent reduction orders were extant, and directing the owner to refund overcharges collected from the base rent date inclusive of treble damages, was not arbitrary and capricious, and had a rational basis ( Matter of Cintron v. Calogero, 59 A.D.3d 345, 346, 874 N.Y.S.2d 76 [1st Dept.2009] [citations omitted] ). FN1 FN1. The Appellate Division further held that DHCR appropriately limited the amount of rent overcharges recoverable to the four years prior to the filing of the overcharge complaint (59 A.D.3d at 346, 874 N.Y.S.2d 76). This is not an issue on this appeal as petitioner has abandoned his claim for rent overcharges in excess of four years prior to the filing of his rent overcharge claim with DHCR. Petitioner is merely seeking to have the base rent date set at an earlier time. Petitioner appealed to this Court by permission of the Appellate Division, which certified the following question: Was the order of this Court, which affirmed the order of the Supreme Court, 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.

117 938 N.E.2d 931 Page 4 15 N.Y.3d 347, 938 N.E.2d 931, 912 N.Y.S.2d 498, 2010 N.Y. Slip Op (Cite as: 15 N.Y.3d 347, 938 N.E.2d 931, 912 N.Y.S.2d 498) properly made? Because the Appellate Division order is final, we need not answer the certified question. II. [2] Regardless of the forum in which it is commenced, a rent overcharge claim is **934 ***501 subject to a four-year statute of limitations (see Rent Stabilization Law of 1969 [Administrative Code of City of NY] [a][2] [hereinafter Rent Stabilization Law]; CPLR 213 a). FN2 The Rent Regulation Reform Act of 1997 clarified and reinforced the four-year statute of limitations *354 applicable to rent overcharge claims... by limiting examination of the rental history of housing accommodations prior to the four-year period preceding the filing of an overcharge complaint (Thornton v. Baron, 5 N.Y.3d 175, 180, 800 N.Y.S.2d 118, 833 N.E.2d 261 [2005], citing Matter of Gilman v. New York State Div. of Hous. & Community Renewal, 99 N.Y.2d 144, 149, 753 N.Y.S.2d 1, 782 N.E.2d 1137 [2002]; see also Matter of Grimm v. State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 N.Y.3d 358, 912 N.Y.S.2d 491, 938 N.E.2d 924 [2010] [decided today] ). Notably, the term rental history is not defined in the relevant statutes or in DHCR regulations and we need not attempt to define it here. As we have previously explained, the purpose of the four-year limitations or look-back period is to alleviate the burden on honest landlords to retain rent records indefinitely ( Thornton, 5 N.Y.3d at 181, 800 N.Y.S.2d 118, 833 N.E.2d 261, citing Matter of Gilman, 99 N.Y.2d at 149, 753 N.Y.S.2d 1, 782 N.E.2d 1137; see also Jenkins v. Fieldbridge Assoc., LLC, 65 A.D.3d 169, 174, 877 N.Y.S.2d 375 [2d Dept.2009], appeal dismissed 13 N.Y.3d 855, 891 N.Y.S.2d 688, 920 N.E.2d 92 [2009] ). FN2. Rent Stabilization Law (a)(2) states: [A] complaint under this subdivision shall be filed with [DHCR] within four years of the first overcharge alleged and no determination of an overcharge and no award or calculation of an award of the amount of an overcharge may be based upon an overcharge having occurred more than four years before the complaint is filed... This paragraph shall preclude examination of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this subdivision, and CPLR 213 a states: An action on a residential rent overcharge shall be commenced within four years of the first overcharge alleged and no determination of an overcharge and no award or calculation of an award of the amount of any overcharge may be based upon an overcharge having occurred more than four years before the action is commenced. This section shall preclude examination of the rental history of the housing accommodation prior to the four-year period immediately preceding the commencement of the action. [3] Moreover, Rent Stabilization Law , which addresses rent reduction orders, states: [A]ny tenant may apply to [DHCR] for a reduction in the rent to the level in effect prior to its most recent adjustment and for an order requiring services to be maintained as provided in this section, and [DHCR] shall so reduce the rent if it is found that the owner has failed to maintain such services. The owner shall also be barred from applying for or collecting any further rent increases. The restoration of such services shall result in the prospective elimination of such sanctions (emphasis added). Rent reduction orders thus place a continuing obligation *355 upon an owner to reduce rent until the required services are restored or repairs are 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.

118 938 N.E.2d 931 Page 5 15 N.Y.3d 347, 938 N.E.2d 931, 912 N.Y.S.2d 498, 2010 N.Y. Slip Op (Cite as: 15 N.Y.3d 347, 938 N.E.2d 931, 912 N.Y.S.2d 498) made (Thelma Realty Co. v. Harvey, 190 Misc.2d 303, , 737 N.Y.S.2d 500 [App.Term, 2d Dept. 2001]; see also Matter of Condo Units v. New York State Div. of Hous. & Community Renewal, 4 A.D.3d 424, 425, 771 N.Y.S.2d 380 [2d Dept.2004], lv. denied **935***5025 N.Y.3d 705, 801 N.Y.S.2d 251, 834 N.E.2d 1261 [2005]; Crimmins v. Handler & Co., 249 A.D.2d 89, 91, 671 N.Y.S.2d 469 [1st Dept.1998] ). Here, it is alleged that the landlord failed to fulfill his continuing obligation by willfully flouting DHCR rent reduction orders. The Rent Stabilization Law and Code are unfortunately silent as to the effect that a rent reduction order, issued prior to the four-year limitations period but still in effect during that period, as is the case here, has on a subsequent overcharge complaint based on that order. Petitioner argues that DHCR rent reduction orders must be considered by DHCR in establishing the legal stabilized rent for an apartment for the purposes of an overcharge complaint and that, because the rent reduction orders here remained in effect and imposed a continuing duty on the landlord to reduce rent during the relevant four-year period, the four-year lookback rule is no bar to considering those orders for the purposes of calculating the amount by which petitioner was overcharged (see Thornton, 5 N.Y.3d at 180, 800 N.Y.S.2d 118, 833 N.E.2d 261; see also Matter of 508 Realty Assoc., LLC v. New York State Div. of Hous. & Community Renewal, 61 A.D.3d 753, , 877 N.Y.S.2d 392 [2d Dept.2009]; Jenkins, 65 A.D.3d at 173, 877 N.Y.S.2d 375). DH- CR, on the other hand, argues that its determination is supported by a rational basis and is consistent with the statute as the Legislature intended the fouryear limitations/look-back period to be absolute, prohibiting the consideration of earlier rent records for the purpose of calculating a rent overcharge. In this matter of statutory construction, where deference to an agency's interpretation is not required (see e.g. Roberts v. Tishman Speyer Props., L.P., 13 N.Y.3d 270, 285, 890 N.Y.S.2d 388, 918 N.E.2d 900 [2009] ), we find petitioner's argument more persuasive as it best reconciles and harmonizes the legislative aims of both the four-year limitations/ look-back period as set forth in Rent Stabilization Law (a)(2) and CPLR 213 a and the continuing obligation of a landlord to reduce rent and make repairs as per Rent Stabilization Law (see McKinney's Cons. Laws of NY, Book 1, Statutes 95, 96 [in interpreting statutes, the goal is to further the intent, spirit and purpose of a statute, to harmonize all parts of a statute to give effect and meaning to every part] ). [4] Certainly, DHCR can take notice of its own orders and the rent registrations it maintains to ascertain the rent established *356 by a rent reduction order without imposing onerous obligations on landlords. Moreover, refusing to give effect to a rent reduction order's direction to roll back rent in cases where the order remained in effect during the statutory four-year period would countenance the landlord's failure to restore required services and thwart the goals of the Legislature in enacting Rent Stabilization Law , namely, to motivate owners of rent-stabilized housing accommodations to provide required services, compensate tenants deprived of those services, and preserve and maintain the housing stock in New York City (Jenkins, 65 A.D.3d at 173, 877 N.Y.S.2d 375, citing Matter of Hyde Park Assoc. v. Higgins, 191 A.D.2d 440, 442, 594 N.Y.S.2d 57 [1st Dept.1993] ). In short, rent reduction orders impose a continuing obligation on a landlord and, if still in effect during the four-year period, are in fact part of the rental history which DHCR must consider. [5] We conclude that the purposes of the relevant statutes are best served here if DHCR calculates the amount of rent overcharge by reference to the 1987 and 1989 rent reduction orders, which remained in effect during the four-year limitations period and, accordingly, were part **936 ***503 of the rental history that the Rent Stabilization Law permits DHCR to consider. Accordingly, the order of the Appellate Divi Thomson Reuters. No Claim to Orig. US Gov. Works.

119 938 N.E.2d 931 Page 6 15 N.Y.3d 347, 938 N.E.2d 931, 912 N.Y.S.2d 498, 2010 N.Y. Slip Op (Cite as: 15 N.Y.3d 347, 938 N.E.2d 931, 912 N.Y.S.2d 498) sion should be reversed, with costs, and the case remitted to Supreme Court with directions to remand to respondent DHCR for further proceedings in accordance with this opinion. The certified question should not be answered upon the ground that it is unnecessary. SMITH, J., dissenting. The relevant provisions of the Rent Regulation Reform Act of 1997 seem as clear to me as they did when I dissented in Thornton v. Baron, 5 N.Y.3d 175, 800 N.Y.S.2d 118, 833 N.E.2d 261 (2005). [N]o determination of an overcharge and no award or calculation of an award of the amount of an overcharge may be based upon an overcharge having occurred more than four years before the complaint is filed... This paragraph shall preclude examination of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this subdivision (Rent Stabilization Law [RSL] of 1969 [Administrative Code of City of NY] [a][2]; see also id [a] [ Where the amount of rent set forth in the annual rent registration statement filed four years prior to the most recent registration statement*357 is not challenged within four years of its filing, neither such rent nor service of any registration shall be subject to challenge at any time thereafter ]; Rent Stabilization Code [9 NYCRR] [a][2] ). seems to me, found a fair solution by ordering that, where the noncompliance goes on for more than four years, the rent is in effect frozen for a rolling four-year period so that the tenant cannot get the advantage of a rent level more than four years old, but the landlord is never free from the reduction order's effect. This works no undue hardship on the tenant, who need only file a complaint within four years of being overcharged to avoid any time bar. It is thus unnecessary to resort to the fiction embraced by the majority that a rent level existing more than four years earlier is transformed by the rent reduction order into a part of the [more recent] rental history which DHCR must consider (majority op. at 356, 912 N.Y.S.2d at , 938 N.E.2d at ). I would affirm the order of the Appellate Division. Chief Judge LIPPMAN and Judges GRAFFEO, READ, PIGOTT and JONES concur with Judge CIPARICK; Judge SMITH dissents and votes to affirm in a separate opinion. Order reversed, etc. N.Y.,2010. Cintron v. Calogero 15 N.Y.3d 347, 938 N.E.2d 931, 912 N.Y.S.2d 498, 2010 N.Y. Slip Op END OF DOCUMENT In Thornton, this Court, unjustifiably I thought, wrote an exception into the statute, and in this case it writes another one, which I also think unjustified. I grant that there is some tension between the command of the 1997 Reform Act that rental history going back more than four years may not be considered and the provision of RSL that rent reduction orders based on a failure to provide required services remain in effect until the deficiency in services is cured. There is not such a stark conflict, however, as to justify the majority's choice to let one statute nullify the other. DHCR has, it 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.

120 Matter of Boyd v New York State Div. of Hous. & Community Renewal (2013 NY Slip... file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 1 of 5 12/4/2014 Matter of Boyd v New York State Div. of Hous. & Community Renewal 2013 NY Slip Op [110 AD3d 594] October 29, 2013 Appellate Division, First Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law 431. As corrected through Wednesday, November 27, 2013 In the Matter of Kelley S. Boyd, Appellant, v New York State Division of Housing and Community Renewal et al., Respondents. [*1] Kelley S. Boyd, appellant pro se. Gary R. Connor, New York (Jack Kuttner of counsel), for New York State Division of Housing and Community Renewal, respondent. Rappaport, Hertz, Cherson & Rosenthal, P.C., Forest Hills (David I. Paul of counsel), for 232/242 Realty Co., LLC., respondent. Judgment, Supreme Court, New York County (Barbara Jaffe, J.), entered May 18, 2012, insofar as appealed from as limited by the briefs, denying the petition and dismissing the proceeding brought pursuant to CPLR article 78 to annul the determination of respondent New York State Division of Housing and Community Renewal (DHCR), issued July 19, 2011, which denied petitioner's petition for administrative review (PAR) of the denial of her rent overcharge complaint, reversed, on the law, without costs, the judgment vacated, and the matter remanded to DHCR for further proceedings consistent herewith. Although petitioner filed her overcharge complaint more than four years after the building owner registered the monthly rent, she contends that DHCR should not have accepted $1,750 as the registered monthly rent on the base date, April 7, 2005, because there are substantial indicia of fraud. The owner increased the registered monthly rent from $572 in July 2004, when a long

121 Matter of Boyd v New York State Div. of Hous. & Community Renewal (2013 NY Slip... file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 2 of 5 12/4/2014 time tenant vacated the apartment, to $1,750 in October More than 90% of the increase reflects an adjustment for "individual apartment improvements" (IAIs) under the Rent Stabilization Law of 1969 (Administrative Code of City of NY et seq.) and the Rent Stabilization Code (9 NYCRR et seq.). To justify that adjustment, the owner would have had to spend about $39,000 to renovate the apartment in Petitioner, who moved into the apartment in 2007, is currently paying rent of over $2,000 a month. In a letter to DHCR, petitioner set forth a specific and detailed description of the apartment in 2007, alleging that, based on its condition when she moved in, the owner could not have spent $39,000 for improvements to the building, which was constructed in Among other things, petitioner stated that the hardwood floors, bathtub, doors, and fixtures are original to [*2]the apartment, and that the kitchen had been updated with low-quality appliances which she estimated cost less than $1,000. She described the kitchen as having "very inexpensive Home Depot cabinets," slat floors, and a used or recycled sink that did not fit in the cutout in the wall. The owner has never submitted any evidence rebutting petitioner's claim that the IAIs were minimal and cost far less than claimed. Under the standard set forth in Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin. (15 NY3d 358 [2010]), petitioner made a sufficient showing of fraud to require DHCR to investigate the legality of the base date rent (see also Bogatin v Windermere Owners LLC, 98 AD3d 896 [1st Dept 2012]). Although the "lookback" for an apartment's rental history is ordinarily limited to the four-year period preceding the date that the petitioner files the complaint (see Thornton v Baron, 5 NY3d 175, 180 [2005]), where fraud is alleged and there is "substantial indicia of fraud on the record," DHCR is obliged to investigate whether the base date rate was legal and "act[s] arbitrarily and capriciously in failing to meet that obligation" (Grimm, 15 NY3d at 366). Thus, we find that DHCR's disparate treatment of the parties' claims was arbitrary. While the agency made no attempt to evaluate the legitimacy of petitioner's claims despite their consistency and degree of detail, DHCR credited the owner's implicit claim that it spent $39,000 to renovate the apartment simply because "it would not be difficult for anyone with any experience in this industry to believe it could have taken $39,000 in IAIs to update the appearance and equipment in an apartment which had not changed hands for thirty-two years." This justification for the agency's determination is irrational. Finding that the owner "could have" spent $39,000 in IAIs, where the owner never submitted any evidence

122 Matter of Boyd v New York State Div. of Hous. & Community Renewal (2013 NY Slip... file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 3 of 5 12/4/2014 controverting petitioner's claims is not equivalent to finding that the owner actually made improvements costing that much. Accordingly, this matter should be remanded to DHCR to give the parties the opportunity to present evidence in connection with the legality of the base rate rent. Under the circumstances presented, DHCR acted within its discretion by resolving the PAR on the merits even though petitioner filed it outside the 35-day statutory time frame (9 NYCRR ), and, contrary to the owner's contention, the record does provide a basis to amend the caption. Concur Mazzarelli, J.P., Freedman and Feinman, JJ. Sweeny and Gische, JJ., dissent in a memorandum by Gische, J., as follows: I respectfully dissent. I do not agree with the majority, that petitioner presented sufficient evidence of a fraudulent increase in the legal registered rent for the subject apartment, justifying the examination of the apartment's rental history beyond the statutory four-year look-back period (see Rent Stabilization Law of 1969 [Administrative Code of City of NY] [a] [2]). Petitioner, who moved into the subject apartment in March 2007 pursuant to a one-year lease at a monthly rent of $2,000, filed a rent overcharge claim with DHCR on April 7, 2009, alleging that the owner had obtained a fraudulent increase in the legal registered rent for the apartment from $ per month in July 2004 to $1,750 per month in October 2004, when a new tenant took occupancy. This allegation of fraud was supported only by a letter containing [*3]petitioner's personal observations of the improvements to the subject apartment (IAIs) and her comparison to unidentified fixtures at a big box home improvement store. She estimated that, based upon her research and calculations, the most the improvements could have cost was $5,000. Thus, she maintains that allowing for permissible increases, the legal rent for the first vacancy tenant in October 2004 should have been $974, not $1,750. Petitioner provides no real evidence for her conclusions on value, nor does she account for labor costs or assert that she has any relevant experience qualifying her to opine on the value of the work done. Thus, whether the letter adequately details her complaints about the nature or condition of the IAIs she admits were made to the subject apartment is of no moment in concluding their value. While acknowledging that the "look-back" period for her overcharge complaint was only four years from the filing date, petitioner argues that DHCR should nonetheless have

123 Matter of Boyd v New York State Div. of Hous. & Community Renewal (2013 NY Slip... file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 4 of 5 12/4/2014 investigated the basis for the IAI increase claimed by the owner before the four-year period because of the poor quality of the improvements. After initially issuing an erroneous order dated April 15, 2010, dismissing petitioner's rent overcharge complaint on the basis that the subject apartment was not rent-stabilized, DHCR, on its own initiative, reopened the proceeding after the then recent Court of Appeals decision in Roberts v Tishman Speyer Props., L.P. (13 NY3d 270 [2009]), and accepted further submissions by the parties. In its superseding order dated October 4, 2010, DHCR determined that the subject apartment was, in fact, rent-stabilized because the building was receiving J-51 benefits (see Roberts, 13 NY3d at ). However, using the base date of April 7, 2005, which was four years prior to the filing date of petitioner's rent overcharge complaint, at which time the lease rent was $1,750, DHCR determined that there had been no rent overcharge. Petitioner filed a petition for administrative review which was denied by DHCR on July 19, 2011 on the basis that there was no reason to deviate from the four-year look-back rule, or put the owner to its proof as to the IAIs made over four years before the overcharge complaint was filed. The court below upheld the agency's determination and dismissed the petition. In general, no determination of an overcharge and no calculation of an award of the amount of an overcharge may be based upon an overcharge having occurred more than four years preceding the filing of an overcharge complaint (Rent Stabilization Law of 1969 [Administrative Code of City of NY] [a]). In order to effectuate the purpose of the four-year limitation period, the legal regulated rent is set at the base date, which is four years prior to the filing of the overcharge complaint, plus any subsequent lawful increases (Rent Stabilization Code [9 NYCRR] [e], [f] [1]; [a] [3] [i]). The Court of Appeals culled out a common-law exception to the four-year look-back period where the rent was set by the landlord as part of a fraudulent scheme. Only where there is a "colorable" claim of fraud may the rental history outside the four-year period be examined (see Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 NY3d 358, 364 [2010]; Thornton v Baron, 5 NY3d 175, 180 [2005]). A colorable claim of fraud requires that the tenant present something more than a mere allegation of fraud. It requires some evidence that the owner engaged in a fraudulent act or scheme more than four years prior to the tenant's filing of the rent overcharge claim, justifying the agency's examination of the entire rent history (Matter of Grimm, 15 NY3d at 367).

124 Matter of Boyd v New York State Div. of Hous. & Community Renewal (2013 NY Slip... file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 5 of 5 12/4/2014 The fact that there has been a sizeable increase in the rent for the subject apartment prior to the look-back period does not, alone, support or establish that the tenant has a colorable claim of fraud. This is true even where, as here, the bump up in rent was based upon the installation of [*4]improvements to an apartment which did not require prior DHCR approval (id.). Significantly, the owner complied with all of the rent registration requirements. Accordingly, the information on which petitioner's overcharge claim is based was known to her when she moved into the apartment in 2007, at which time she was within the four-year period permitting a challenge to the rent without having to show a fraudulent predicate. Petitioner's subjective belief that the IAIs could not have cost more than $5,000 does not satisfy her initial burden of showing that the fraud exception to the four-year statute of limitations should be applied, requiring DHCR to review a rent charged more than four years before her overcharge complaint (Thornton v Baron, 5 NY3d at 180). A conclusory claim, without more, is insufficient for the agency to disregard the four-year look-back period established in the Rent Stabilization Law, as codified in the Rent Stabilization Code, requiring that an owner retain records relating to rents for housing accommodations for four years prior to the date of the most recent registration (CPLR 213-a; Rent Stabilization Law of 1969 [Administrative Code of City of NY] [a] [2]; Rent Stabilization Code [9 NYCRR] [a] [2] [ii]). Thus, DHCR's decision to employ the four-year look-back rule rather than the fraud exception in determining the overcharge complaint filed by petitioner had a rational basis in the record and was not arbitrary and capricious or affected by an error of law (see Matter of I.G. Second Generation Partners v New York State Div. of Hous. & Community Renewal, 284 AD2d 149 [1st Dept 2001], lv denied 98 NY2d 607 [2002]). The majority's conclusions that petitioner's letter triggered an inquiry eviscerates the four-year statutory rule whenever a tenant alleges fraud, even without any particularity. I do not believe that Grimm has such wide ranging implications. Additionally, contrary to petitioner's argument, it was not arbitrary or capricious for DHCR to draw upon its own expertise and resources in concluding that $39,000 was not an inordinate expenditure to renovate an apartment that had become vacant for the first time in 32 years. [Prior Case History: 2012 NY Slip Op 31260(U).]

125 Matter of Boyd v New York State Div. of Hous. & Community Renewal (2014 NY Slip... file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 1 of 1 12/4/2014 Matter of Boyd v New York State Div. of Hous. & Community Renewal 2014 NY Slip Op [23 NY3d 999] June 26, 2014 Court of Appeals Published by New York State Law Reporting Bureau pursuant to Judiciary Law 431. As corrected through Wednesday, October 8, 2014 [*1] In the Matter of Kelley S. Boyd, Respondent, v New York State Division of Housing and Community Renewal et al., Appellants. Decided June 26, 2014 Matter of Boyd v New York State Div. of Hous. & Community Renewal, 110 AD3d 594, reversed. {**23 NY3d at 1000} OPINION OF THE COURT On review of submissions pursuant to section of the Rules of the Court of Appeals (22 NYCRR ), order reversed, with costs, judgment of Supreme Court, New York County, reinstated, and certified question answered in the negative. New York State Division of Housing and Community Renewal's determination denying tenant's petition for administrative review was not arbitrary or capricious, as tenant failed to set forth sufficient indicia of fraud to warrant consideration{**23 NY3d at 1001} of the rental history beyond the four-year statutory period (see Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 NY3d 358, [2010]). Concur: Chief Judge Lippman and Judges Graffeo, Read, Smith, Pigott, Rivera and Abdus-Salaam.

126 72A Realty Assoc. v Lucas (2011 NY Slip Op 21188) file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 1 of 4 12/4/ A Realty Assoc. v Lucas 2011 NY Slip Op [32 Misc 3d 47] Accepted for Miscellaneous Reports Publication AT1 Published by New York State Law Reporting Bureau pursuant to Judiciary Law 431. As corrected through Wednesday, September 7, 2011 [*1] 72A Realty Associates, Appellant-Respondent, v Sandra Lucas, Respondent-Appellant, et al., Respondents. Supreme Court, Appellate Term, First Department, June 1, A Realty Assoc. v Lucas, 28 Misc 3d 585, modified. APPEARANCES OF COUNSEL Joel M. Zinberg, New York City and Murray Shactman, New York City, for appellantrespondent. Sokolski & Zekaria, P.C., New York City (Robert E. Sokolski of counsel), for respondent-appellant. {**32 Misc 3d at 48} OPINION OF THE COURT Per Curiam. Order, dated May 25, 2010, modified to deny tenant's application for attorney's fees, and, as modified, affirmed, without costs. Landlord commenced this holdover summary proceeding in September 2008, based upon allegations that tenant's lease agreement for the purportedly unregulated apartment expired by its own terms on August 31, Specifically, the petition alleged that the "apartment was decontrolled and became subject to the market rate because of a high rent vacancy that occurred on March 1, 2001." Upon the parties' respective cross{**32 Misc 3d

127 72A Realty Assoc. v Lucas (2011 NY Slip Op 21188) file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 2 of 4 12/4/2014 at 49} motions, Civil Court, among other things, dismissed the petition on the ground that the apartment was subject to rent stabilization and directed a hearing in connection with tenant's counterclaims for rent overcharges and attorney's fees. We agree, essentially for the reasons stated by Civil Court (28 Misc 3d 585 [2010]), that [*2]landlord is precluded from relying upon the luxury decontrol provisions of the Rent Stabilization Law "by virtue of" its receipt of J-51 tax benefits (see Rent Stabilization Law of 1969 [Administrative Code of City of NY] , [a]). The holding of Roberts v Tishman Speyer Props., L.P. (13 NY3d 270 [2009]), that apartments in buildings receiving J-51 tax benefits are exempt from high rent deregulation regardless of how they became subject to rent stabilization, was properly applied retroactively (see Roberts v Tishman Speyer Props., L.P., NYLJ, Aug. 6, 2010, at 43, col 1 [Sup Ct, NY County, Lowe, III, J.]). Roberts "did not 'establish a new principle of law.' It merely construed a statute that had been in effect for a number of years... A judicial decision construing the words of a statute... does not constitute the creation of a new legal principle" (Gurnee v Aetna Life & Cas. Co., 55 NY2d 184, 192 [1982], cert denied 459 US 837 [1982]). We also sustain Civil Court's ruling that, although the J-51 tax abatement period has now expired, tenant's apartment remains subject to rent stabilization, in the absence of any showing that landlord provided the applicable lease notice informing tenant that the apartment was to become deregulated at the expiration of the tax abatement period (see Rent Stabilization Law [c]; East W. Renovating Co. v New York State Div. of Hous. & Community Renewal, 16 AD3d 166, [2005]; 254 PAS Prop. LLC v Gamboa, 16 Misc 3d 131[A], 2007 NY Slip Op 51429[U] [App Term, 1st Dept 2007]). We acknowledge that the strict application of the J-51 notice requirement in the circumstances here present may work a hardship on this landlord. After all, landlord, in good faith reliance on DHCR's long-standing and unambiguous interpretation of the luxury decontrol statute codified in Rent Stabilization Code (9 NYCRR) (o) and unchallenged for the better part of a decade until determined to be erroneous by the Roberts court proceeded with the understanding that it was exempt from the notice requirement based upon a reasonable, but as it turns out mistaken, belief that respondent's tenancy was not subject to rent stabilization coverage in the first instance. However, we are constrained to strictly enforce the statutory J- 51 notice{**32 Misc 3d at 50} requirement as written, without engrafting onto the regulatory framework equitable factors not specified therein.

128 72A Realty Assoc. v Lucas (2011 NY Slip Op 21188) file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 3 of 4 12/4/2014 With respect to tenant's rent overcharge counterclaim, we agree that no basis was shown for the court to go outside the four-year look-back period (see Rent Stabilization Law [Administrative Code of City of NY] [a] [2]; cf. Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 NY3d 358, [2010]), or to impose treble damages upon landlord (see generally Matter of Round Hill Mgt. Co. v Higgins, 177 AD2d 256 [1991]), tenant having failed to demonstrate a tenable claim of fraud or willfulness on the landlord's part. Nor has tenant shown any basis for application of the Thornton default formula (see Thornton v Baron, 5 NY3d 175 [2005]) to determine the legal rent for the apartment (see Matter of Cabrini Realty v New York State Div. of Hous. & Community Renewal, 6 AD3d 280, 281 [2004]; Lexford Prop., L.P. v Alter Realty Co., Inc., 31 Misc 3d 142[A], 2011 NY Slip Op 50859[U] [App Term, 1st Dept 2011]). We part ways with the motion court only with respect to the issue of attorney's fees. Granted, landlord does not and cannot reasonably challenge tenant's status as prevailing party, and this even though tenant was unsuccessful in several of her arguments relating to her rent overcharge counterclaim (see Senfeld v I.S.T.A. Holding Co., 235 AD2d 345 [1997], lv denied 92 NY2d 818 [1998]). However, we find persuasive landlord's argument that the imposition of [*3]attorney's fees against it would be unfair under the particular circumstances of this case, where its possessory claim, albeit unsuccessful, was at least colorable at the time of commencement of the holdover proceeding (see Wells v East 10th St. Assoc., 205 AD2d 431 [1994], lv denied 84 NY2d 813 [1995]; Roxborough Apts. Corp. v Becker, 11 Misc 3d 99, 101 [2006]). In closing, we note our recognition that the rent stabilization scheme, even without factoring in differences in interpretation between court and agency, can prove to be an "impenetrable thicket confusing not only to laymen but to lawyers" (La Guardia v Cavanaugh, 53 NY2d 67, 70 [1981], quoting Matter of 89 Christopher v Joy, 35 NY2d 213, 220 [1974]). Given this reality, and with an eye toward ameliorating any "unacceptable burdens" that may be imposed on this and other similarly situated landlords in the wake of Roberts (13 NY3d at 287), we invite the Legislature to consider amending the Rent Stabilization Law to include a "good faith reliance" defense of the type{**32 Misc 3d at 51} presently found in several federal statutes affecting various areas of the law (see e.g. Truth in Lending Act, 15 USC 1640 [f]; Portal-to-Portal Act of 1947, 29 USC 259 [a] [each precluding liability for acts done or omitted "in conformity" with agency interpretation of

129 72A Realty Assoc. v Lucas (2011 NY Slip Op 21188) file:///l:/archived%20cle%20programs-1999-current/2014/nov.dec/chip%20... Page 4 of 4 12/4/2014 statute]). Schoenfeld, J.P., Shulman and Hunter, Jr., JJ., concur.

130 148 A.D.2d 610 Page A.D.2d 610 (Cite as: 148 A.D.2d 610, 539 N.Y.S.2d 667) Matter of J.R.D. Mgt. Corp. v Eimicke 148 A.D.2d 610, 539 N.Y.S.2d 667 N.Y.A.D., A.D.2d 610, 539 N.Y.S.2d 667, 1989 WL In the Matter of J. R. D. Management Corp., Appellant, v. William Eimicke, as Commissioner of the New York State Division of Housing and Community Renewal, Respondent. Supreme Court, Appellate Division, Second Department, New York March 20, 1989 CITE TITLE AS: Matter of J.R.D. Mgt. Corp. v Eimicke OPINION OF THE COURT Mollen, P. J., Mangano, Thompson and Rubin, JJ., concur. In a proceeding pursuant to CPLR article 78 to review a determination of the respondent Commissioner of the New York State Division of Housing and Community Renewal, dated February 26, 1987, granting a rent rollback, the petitioner appeals from (1) a judgment of the Supreme Court, Kings County (Golden, J.), dated August 24, 1987, which dismissed the petition and (2) so much of an order of the same court, entered December 28, 1987, as upon reargument, adhered to its original determination. Ordered that the appeal from the judgment dated August 24, 1987 is dismissed, without costs or disbursements, as that judgment was superseded by the order entered December 28, 1987, made upon reargument; and it is further, Ordered that the order entered December 28, 1987 is reversed *611 insofar as appealed from, on the law, without costs or disbursements, the judgment dated August 24, 1987 is vacated, and the matter is remitted to respondent for a determination of the tenant's complaint of a rent overcharge under the law as it existed at the time of its determination, to wit, Administrative Code of the City of New York former YY (g) (now [g]). This dispute arises from the decision of the respondent Commissioner of the New York State Division of Housing and Community Renewal to award a tenant a rent rollback after the petitioner J.R.D. Management Corp. failed to submit leases to show the rent history of apartment 4-D at 2701 Newkirk Avenue in Brooklyn. On March 29, 1984, the tenant filed a rent overcharge complaint against the petitioner. The respondent demanded complete rent records of the premises pursuant to Code of the Rent Stabilization Association of New York City, Inc. (Rent Stabilization Code) 42 (A). Upon the petitioner's failure to provide all of the requested records, on October 4, 1985, the respondent granted the tenant a rent rollback. On February 26, 1987, the petitioner's petition for administrative review was denied. Thus the petitioner brought the instant CPLR article 78 proceeding to review the respondent's determination. The Supreme Court dismissed the petition and adhered to its determination upon reargument. The petitioner's principal argument on appeal is that the respondent erred in applying Rent Stabilization Code 42 (A) to the case at bar. Rather, the petitioner contends that, consistent with its practice in other cases, the respondent should have decided this matter in accordance with the law at the time of the determination of the case. On April 1, 1984, two days after the tenant filed her complaint, Administrative Code former YY (g) became effective (see, L 1983, ch 403, as amended by L 1984, ch 102, hereinafter the Omnibus Housing 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.

131 148 A.D.2d 610 Page A.D.2d 610 (Cite as: 148 A.D.2d 610, 539 N.Y.S.2d 667) Act). Insofar as relevant, Administrative Code former YY (g) (now [g]) provided that an owner who has registered its building, shall not be required to maintain or produce any records relating to rentals of [premises] for more than four years prior to the most recent registration [of such premises]. It is well established that: Where a statute has been amended during the pendency of a proceeding, the application of that amended statute to the pending proceeding is appropriate and poses no constitutional problem (Bucho Holding Co. v. Temporary State Hous. Rent. Commn., 11 NY2d 469; *612I.L.F.Y. Co. v. City Rent & Rehabilitation Admin., 11 NY2d 480;Matter of Taleff Realty Corp. v. Jay, 54 AD2d 423) (Matter of St. Vincent's Hosp. & Med. Center v. New York State Div. of Hous. & Community Renewal, 109 AD2d 711, 712,affd66 NY2d 959). and find that they are without merit. Copr. (c) 2014, Secretary of State, State of New York N.Y.A.D.,1989. J.R.D. MANAGEMENT CORP. V EIMICKE 148 A.D.2d 610, 539 N.Y.S.2d WL , 539 N.Y.S.2d WL END OF DOCUMENT In Matter of St. Vincent's Hosp. & Med. Center v. New York State Div. of Hous. & Community Renewal (supra.), as well as other cases under the Omnibus Housing Act as amended, the respondent sought to apply the law as it existed at the time of the determination of the matter (see, Matter of St. Vincent's Hosp. & Med. Center v. New York State Div. of Hous. & Community Renewal, supra.;coronet Props. Co. v. State of N. Y., Div. of Hous. & Community Renewal, NYLJ, Nov. 26, 1986, at 11, col 4 [Sup Ct, NY County], affd134 AD2d 967 [case brought pursuant to Administrative Code former YY (a) (ii), recodified as (a) (ii)]; cf., Matter of Reichman v. New York City Conciliation & Appeals Bd., 117 AD2d 517). Nevertheless, in the case at bar, the respondent seeks to apply the law as it existed at the time of the complaint without offering a rational reason for the lack of consistency in its application of the law. Such an inconsistent application of the law is arbitrary and capricious. Therefore, the order must be reversed and the matter remitted to the respondent for a new determination. We have considered the parties' other contentions 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.

132 148 A.D.2d 185, 544 N.Y.S.2d 331 (Cite as: 148 A.D.2d 185, 544 N.Y.S.2d 331) Page 1 Supreme Court, Appellate Division, First Department, New York. In the Matter of the Application of Robert & Suzanne LAVANANT, Petitioners Appellants, for a judgment under Article 78 of the Civil Practice Law and Rules, v. STATE DIVISION OF HOUSING AND COM- MUNITY RENEWAL, Manuel Mirabal, Deputy Commissioner for Rent Administration, Respondents Respondents. July 20, Landlords filed an Article 78 proceeding to vacate a decision by the State Division of Housing and Community Renewal awarding treble damages to a tenant for rent overcharges. The Supreme Court, New York County, Glen, J., dismissed the petition. Landlords appealed. The Supreme Court, Appellate Division, Smith, J., held that: (1) the tenant was entitled to treble damages for rent overcharges from the effective date of the treble damages provision of the Rent Stabilization Law, even though he filed his complaint before that date; (2) the evidence supported the finding that the overcharges had been willful; and (3) the Division acted rationally in requiring a complete rent history, where the tenant's complaint had been filed before the effective date of the provision placing a fouryear limitation on the calculation of rent overcharges. Judgment affirmed. West Headnotes [1] Landlord and Tenant Landlord and Tenant 233IX Regulated Rents 233IX(C) Prohibited Landlord Conduct 233k1945 Proceedings 233k1953 k. Relief. Most Cited Cases (Formerly 233k200.73) State Division of Housing and Community Renewal had statutory authority to award tenant treble damages on rent overcharges, even though tenant's complaint had been filed before effective date of Rent Stabilization Law provision authorizing treble damages; treble damages provision gave landlords notice that treble damage penalty could be imposed for overcharges occurring after effective date. Administrative Code, , , subds. a, a(2). [2] Landlord and Tenant (4) 233 Landlord and Tenant 233IX Regulated Rents 233IX(C) Prohibited Landlord Conduct 233k1945 Proceedings 233k1950 Evidence 233k1950(4) k. Weight and sufficiency. Most Cited Cases (Formerly 233k200.76) Evidence supported finding by State Division of Housing and Community Renewal that landlords' rent overcharges had been willful, despite landlords' claim that overcharges were due to the landlords' belief that they were entitled to increases for improvements, for purposes of granting tenant in rent-stabilized apartment treble damages on overcharges. Administrative Code, , , subds. a, a(2). [3] Landlord and Tenant Landlord and Tenant 233IX Regulated Rents 233IX(C) Prohibited Landlord Conduct 233k1945 Proceedings 233k1948 k. Time to sue and limitations. Most Cited Cases (Formerly 233k200.72) State Division of Housing and Community Renewal acted rationally when it decided that com Thomson Reuters. No Claim to Orig. US Gov. Works.

133 148 A.D.2d 185, 544 N.Y.S.2d 331 (Cite as: 148 A.D.2d 185, 544 N.Y.S.2d 331) Page 2 plete rent history was necessary for rent overcharge complaints filed before April 1, 1984, even though Omnibus Housing Act established new four-year limitation on calculation of rent overcharges; effective date of four-year limitation was delayed in order to enable tenants in rent-stabilized apartments to file claims for overcharges that had accrued more than four years before enactment. Administrative Code, (g). **332 *186 Robert H. Berman, of counsel (Finkelstein, Borah, Schwartz, Altschuler & Goldstein, P.C., attorneys), New York City, for petitioners-appellants. Richard Hartzman, of counsel (Dennis B. Hasher, attorney) for respondents-respondents. Before MURPHY, P.J., and SULLIVAN, KAS- SAL, ELLERIN, and SMITH, JJ. SMITH, Justice. Petitioner-landlords Robert and Suzanne Lavanant appeal from a judgment of the Supreme Court, New York County, which dismissed their petition seeking review of a determination by respondent State Division of Housing and Community Renewal (the Division ) granting treble damages to a tenant on rent overcharges collected by petitioners after April 1, The issue here is whether the respondent Division properly imposed treble damages upon petitioner-landlords pursuant to Title 26 of The New York City Administrative Code upon a finding of a rent overcharge where the complaint was filed by the tenant prior to April 1, 1984, the effective date of Section YY (now ) of said Code. Petitioners do not challenge the Division's determination that their tenant was in fact overcharged both before and after April 1, Petitioners are the owners of an apartment building at 228 *187 East 75th Street in Manhattan which is subject to New York City's Rent Stabilization Law. In November 1981, G. Duane Peters, the tenant of apartment 2A, filed a rent overcharge complaint with the Conciliation and Appeals Board ( CAB ), the predecessor agency to the Division. The complaint was based in part on an allegation that petitioners had signed two leases on the same date for two different tenants, one at $ and the other at $ per month, and that subsequent increases were based upon the higher rent even though the first tenant had never occupied the apartment. In answer to the complaint petitioners submitted the leases of prior tenants of the apartment from 1976, when the apartment became subject to the Rent Stabilization Law, and copies of bills for new equipment and improvements to the apartment made immediately prior to Mr. Peters' occupancy. Petitioners indicated that the first lease referred to by Peters was an accommodation for the then tenant-in-occupancy who wished to remain in the apartment for an additional month. This lease was for one year. The subsequent tenant executed a two year lease covering that same period **333 since she was willing to wait a month for the apartment to be vacated. The District Rent Administrator of the Division requested additional information and in a Final Notice of Pending Default sent to petitioners on September 12, 1986, stated: Treble damages will be imposed on any overcharge occurring after April 1, 1984 for which the owner fails to satisfy the Division that the overcharge was not willful. On February 3, 1987, some five years after the initial complaint, the District Rent Administrator issued an order finding that since December 15, 1979 the tenant had been overcharged in rent by $1, and in security deposits by $22.27, and directing a refund of the overcharges with interest. On February 11, 1987 the tenant filed a Petition for Administrative Review, claiming that the District Rent Administrator's order should be modified to award him treble damages pursuant to the Rent Stabilization Law YY [now ] since petitioners had not established by a 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.

134 148 A.D.2d 185, 544 N.Y.S.2d 331 (Cite as: 148 A.D.2d 185, 544 N.Y.S.2d 331) Page 3 preponderance of the evidence that the overcharges were not willful. Petitioners responded, claiming, inter alia, that the tenant's complaint was filed prior to April 1, 1984, the effective date of YY ; that they had not received notice of the possible imposition of treble damages; and that their responsiveness to the original complaint, *188 the nominal amount of the overcharge and the disallowance of certain claimed improvements, all support a finding that the overcharge was not willful. Based upon these submissions and a review of the entire record, the Division, on June 26, 1987, issued an order directing treble damages as to the post-april 1, 1984 overcharge of $696.81, stating in part:... on September 12, 1986 the Division sent a correctly addressed Final Notice of Pending Default to the owner. This notice stated, in part: Treble damages will be imposed on any overcharge occurring after April 1, 1984 for which the owner fails to satisfy the Division that the overcharge was not willful.... Nothing in the record or in the owner's answer to this Petition indicates that the owner has met its burden of proving the overcharges were not willful... Accordingly, the Administrator's Order is hereby modified by replacing the $ post-april 1, 1984 actual overcharge (without interest) by three times that amount, $2,090.43, and by subtracting the $49.46 in interest which the Administrator imposed in lieu of treble damages although the complaint was filed prior to the effective date of the Act (April 1, 1984), the DH- CR (Division) served the owner with the... Final Notice of Pending Default, which clearly advised the owner of the penalty of treble damages unless willfulness was disproved. The Commissioner notes that this Order is not based on the tenant's assertion that the fact that the owner signed two leases on one day proves the willfulness of the overcharges. The record supports the owner that the first lease was a renewal lease to the then-current tenant who was planning to vacate and the second lease was a vacancy lease to a new tenant. Finally, the Commissioner notes that since both of the above-mentioned leases began in a single guideline period the possibility of piggybacking (compounding rent increases in a single guideline period) arises and it is the general rule that no treble damages are imposed if that is the sole source of the overcharge... However, in the present case no piggybacking occurred. Indeed, there was a greater overcharge in the first of the two leases in question than in the second lease. *189 This proves that piggybacking was not the source of the overcharges. Thereafter, the Lavanants commenced a proceeding pursuant to CPLR, Article 78 to vacate the Division's award of treble damages. In the judgment appealed from, the IAS court denied the petition, finding that the Division's determination had a rational basis and that treble damages may be awarded to a tenant for overcharges accruing on or after April 1, 1984 even though the tenant's complaint was filed prior to **334 that date. The court also noted that willfulness is knowing, not necessarily malicious, conduct and that since the petitioners failed to supply the Division with any evidence whatsoever on the issue of willfulness, there was no need to hold a hearing. This appeal followed. [1] Petitioners' assertion that the Division lacks the statutory authority to impose treble damages upon them because their tenant's complaint was filed prior to April 1, 1984, the effective date of YY of the N.Y.C.Admin.Code (now ), is without merit. Cenpark Realty Company v. State Division of Housing and Community Renewal, 131 A.D.2d 980, 515 N.Y.S.2d 941 (1st Dept.1987), lv. to appeal den. 70 N.Y.2d 609, Thomson Reuters. No Claim to Orig. US Gov. Works.

135 148 A.D.2d 185, 544 N.Y.S.2d 331 (Cite as: 148 A.D.2d 185, 544 N.Y.S.2d 331) Page 4 N.Y.S.2d 109, 516 N.E.2d In Cenpark, the State Division of Housing and Community Renewal determined that a tenant had been overcharged and directed a refund, including treble damages for the period after April 1, Although informed that she could file a Petition for Administrative Review of the said order, the landlord failed to do so. Instead she sought relief by means of an Article CPLR 78 proceeding in the Supreme Court. That court denied relief for failure to exhaust administrative remedies and this court affirmed. Section (a) of the Code provides that a landlord who has been found by the Division to have collected rent overcharges shall be liable to the tenant for a penalty equal to three times the amount of such overcharge. However, if the landlord establishes by a preponderance of the evidence that the overcharge was not willful, the penalty is to be assessed at only the amount of the overcharge plus interest. Moreover, (a)(2) proscribes the award of treble damages based upon an overcharge having occurred more than two years before the complaint is filed or... which occurred prior to April first, nineteen hundred eighty-*190 four. FN1 Thus, as notice to petitioners was given, the Division could impose a treble damage penalty for overcharges occurring after April 1, FN1. Prior to the enactment of YY ( ) a tenant could commence a civil action for treble damages against an overcharging landlord. The burden of proving non-willfulness was on the landlord. Such civil remedy is still available (d)(2) [formerly Y (d)(2) ]. [2] Next, petitioners contend that the respondents erroneously determined that the overcharge to Peters was willful, since such overcharge was due to their belief that they were entitled to increases for certain improvements [N.Y.C.Admin.Code 20C(1) ], which improvements were eventually disallowed by respondents. However, petitioners' contention is belied by the record. The Division specifically found that the overcharges originated in October 1978 with the first of the aforementioned two prior leases for the apartment and was not due, as claimed by petitioners, to an increase based upon the cost of lumber, a new lock and an air conditioner charge, added with other allowed improvements at the time of petitioners' lease to Mr. Peters. The origin of the overcharge in 1978 is made obvious by the record; it was carried through subsequent leases and was modified through deductions for allowable improvements, finally leading to an overcharge of $9.80 per month in the first lease to Mr. Peters in December Petitioners offered no evidence that the overcharges in the prior leases were not willful, nor do they do so now. Willfulness is intentionally doing an act and knowing that the act is being done. Matter of Old Republic Life Insurance Co. v. Thacher, 12 N.Y.2d 48, 234 N.Y.S.2d 702, 186 N.E.2d 554 (1962). Petitioners have not disproven that commencing in 1978 they consciously and knowingly charged their tenants the improper rent. A rational basis supports respondents' award of treble damages which, therefore, must stand. [Matter of Pell v. Board of Education, 34 N.Y.2d 222, 356 N.Y.S.2d 833, 313 N.E.2d 321 (1974).] [3] For the first time, in their reply brief before this court, petitioners contend that the prior leases should not have been **335 considered by the Division because the law has changed and no longer requires a landlord to produce a complete rent history. The old law, Section 42(a) of the New York City Rent Stabilization Code, promulgated pursuant to former Section YY of the Administrative Code, provided in relevant part as follows:... It shall be the *191 duty of an owner to retain all leases in effect May 31, 1968 or thereafter and produce them on demand of the Association (Real Estate Industry Stabilization Association), the CAB (Conciliation and Appeals Board), the Housing and Development Administration or a new purchaser for as long as the Rent Stabiliza Thomson Reuters. No Claim to Orig. US Gov. Works.

136 148 A.D.2d 185, 544 N.Y.S.2d 331 (Cite as: 148 A.D.2d 185, 544 N.Y.S.2d 331) Page 5 tion Law or any extension thereof is in effect. Under Section (g) of the New York City Administrative Code, which was the relevant law in effect on February 3, 1987, the date of the Division's order, the petitioners were not required to produce rent records further back than April 1, In this regard Section YY (g) (now (g)), effective April 1, 1984, provides: Any owner who has duly registered a housing accommodation... shall not be required to maintain or produce any records relating to rentals of such accommodation for more than four years prior to the most recent registration or annual statement for such accommodation. In their reply brief the petitioners also rely on Matter of J.R.D. Management Corp. v. Eimicke, 148 A.D.2d 610, 539 N.Y.S.2d 667 (2nd Dept.1989). There, the Commissioner of the New York State Division of Housing and Community Renewal had awarded a rent roll-back to a tenant after the landlord failed to submit a complete rent history for the apartment pursuant to Rent Stabilization Code 42(A). The Second Department reversed a determination, made in an Article 78 CPLR proceeding, which upheld the Commissioner's action and remitted the matter to the Commissioner. The Second Department ruled that the decision of the Commissioner to apply the law in effect at the time of the filing of the rent overcharge complaint [Rent Stabilization Code 42(A) which required the landlord to submit complete rent records] rather than the law in effect at the time of the determination [Section YY (g), now Section (g), which requires the landlord to submit rent records for only the four year period prior to the most recent registration] was arbitrary and capricious since it was not based upon any rational reason. Respondents in a supplemental surreply brief filed upon leave by this court argue that, contrary to the holding in Matter of J.R.D. Management Corp., its application of the law as it existed at the time of the complaint, under these circumstances, was rational, and consistent with both the legislative intent of the Omnibus Housing Act (Chapter 403, Laws of 1983) and with the established policies of the Division and of its predecessor *192 agency. Respondent contends that the holding in Matter of J.R.D. Management Corp. v. Eimicke, supra, overlooked not only controlling case law and legislative intent but the disastrous effects that the holding would have on some five thousand cases pending before the Division. We find that the administrative determination that complete rent histories should be required for cases filed prior to April 1, 1984 has a rational basis. First, the policy appears to accord with legislative intent. The Omnibus Housing Act (the Act ) which created what is now (g) was enacted on June 30, The Act established for the first time a four year limitation on the calculation of rent overcharges and, concomitantly, on the number of years for which rental records were required. The effective date of Section (g) was delayed until April 1, 1984 in order to enable tenants whose claims for overcharges had accrued more than four years prior to the enactment time to file claims under the existing law. Widespread publicity, including a Press Advisory of the Attorney General Robert Abrams encouraging tenants to file prior to the April 1, 1984 deadline, resulted in some 30,000 filings. **336 Prior to that time, the policy of the Conciliation and Appeals Board, adopted August 18, 1982, was to require that all landlords supply a complete rental history. Section 20 of the Omnibus Housing Act provides for the continuation of proceedings by the Division in the same manner... as if conducted and completed by... (the) conciliation and appeals board. Similarly, Section 19 provides for the continuance of rules and regulations until duly modified or abrogated by the division... Pursuant to Sections 19 and 20, the Conciliation and Appeals Board on February 16, 1984 voted to con Thomson Reuters. No Claim to Orig. US Gov. Works.

137 148 A.D.2d 185, 544 N.Y.S.2d 331 (Cite as: 148 A.D.2d 185, 544 N.Y.S.2d 331) Page 6 tinue the policy of requiring that complete records to 1974 be produced in connection with all overcharge complaints filed prior to April 1, This policy finds support in Matter of 61 Jane Street v. New York City Conciliation and Appeals Board, 108 A.D.2d 636, 486 N.Y.S.2d 694 (1st Dept.1985) aff'd. 65 N.Y.2d 898, 493 N.Y.S.2d 455, 483 N.E.2d 130 (1985). There this court upheld a determination by the motion court that an owner who had purchased a building at a relatively recent date was obliged to supply a total rent history to the Conciliation and Appeals Board on an issue involving a rent overcharge and that failure to do so could result in a lowering of the rent to the lowest rent in the same line of apartments and a substantial back-rent payment. entered on May 2, 1988, unanimously affirmed, without costs and without disbursements. Application granted only to the extent of supplementing record. All concur. N.Y.A.D. 1 Dept.,1989. Lavanant v. State Div. of Housing and Community Renewal 148 A.D.2d 185, 544 N.Y.S.2d 331 END OF DOCUMENT *193 On May 1, 1987, the Division promulgated Section (a)(4) of the Rent Stabilization Code which provides: Complaints filed prior to April 1, 1984 shall be determined in accordance with the Rent Stabilization Law and Code provisions in effect on March 31, 1984, except that an overcharge collected on or after April 1, 1984 may be subject to treble damages pursuant to this section. Thus, respondents requirement that leases dating back to 1974 be provided was rational and finds support in both the law and legislative history of the Act. Second, the interpretation by an administrative agency of the statutes it administers and of its own rules and regulations should be given deference if not unreasonable. Salvati v. Eimicke, 72 N.Y.2d 784, 537 N.Y.S.2d 16, 18, 533 N.E.2d 1045, 1047 (1988), recon. den. 73 N.Y.2d 995, 540 N.Y.S.2d 1006, 538 N.E.2d 358 (1989). Accordingly, the judgment of the Supreme Court, New York County (Glen, J.), entered May 2, 1988, should be affirmed, without costs. Judgment, Supreme Court, New York County, 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.

138 166 A.D.2d 184 Page A.D.2d 184 (Cite as: 166 A.D.2d 184, 564 N.Y.S.2d 77) Matter of 590 W. End Assoc. v State Div. of Hous. & Community Renewal 166 A.D.2d 184, 564 N.Y.S.2d 77 N.Y.A.D., A.D.2d 184, 564 N.Y.S.2d 77, 1990 WL In the Matter of 590 West End Associates, Appellant, v. State Division of Housing and Community Renewal, Respondent. Supreme Court, Appellate Division, First Department, New York (October 4, 1990) CITE TITLE AS: Matter of 590 W. End Assoc. v State Div. of Hous. & Community Renewal Judgment, Supreme Court, New York County (Martin Stecher, J.), entered on November 1, 1989, which dismissed petitioner's CPLR article 78 proceeding, challenging a determination by respondent finding a rent overcharge and granting a rate reduction, unanimously affirmed, without costs and without disbursements. Petitioner owner invites this court to overrule its determination *185 in Matter of Lavanant v State Div. of Hous. & Community Renewal (148 AD2d 185), holding that the respondent agency may rationally require a complete rental history for rent overcharge cases filed prior to April 1, 1984, and urges adoption of the Second Department's contrary holding in Matter of J.R.D. Mgt. Corp. v Eimicke (148 AD2d 610). We decline to do so, as we have in several recent cases (see, e.g., Matter of East 55th St. Joint Venture v Division of Hous. & Community Renewal, 162 AD2d 305;Matter of 3505 Broadway Realty Corp. v New York State Div. of Hous. & Community Renewal, 158 AD2d 347). The Division of Housing and Community Renewal would have had the option of choosing retroactive application of the less stringent requirements of the 1983 Omnibus Housing Act, if it had seen fit (see, Matter of St. Vincent's Hosp. & Med. Center v New York State Div. of Hous. & Community Renewal, 109 AD2d 711, 712,affd66 NY2d 959), but it was not obliged to do so. An administrative agency is bound by prior determinations only where the existence of sufficient factual similarity between the two cases requires it (Matter of Field Delivery Serv. [Roberts], 66 NY2d 516, 521). Such is not the case here. We have considered petitioner's other arguments and find them to be without merit. Concur--Murphy, P. J., Carro, Ellerin, Wallach and Smith, JJ. Copr. (c) 2014, Secretary of State, State of New York N.Y.A.D.,1990. Matter of 590 W. End Assocs. v State Div. of Hous. & Community Renewal 166 A.D.2d 184, 564 N.Y.S.2d WL , 564 N.Y.S.2d WL END OF DOCUMENT 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.

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226 Magda L. Cruz BELKIN BURDEN WENIG & GOLDMAN, LLP 270 Madison Avenue New York, New York Phone: (212) Fax: (212) (212) Website: Magda L. Cruz is a partner at Belkin Burden Wenig & Goldman, LLP. She joined the firm in 1989 and specializes in appeals and complex litigation matters. Ms. Cruz has argued appeals before New York state and federal courts involving all types of residential and commercial real estate disputes. Ms. Cruz counsels clients on matters concerning rent regulation, cooperative and condominium law, tax incentive law, and contractual and statutory construction issues. Prior to joining the firm, Ms. Cruz held positions with the New York County District Attorney s office, The Washington Lawyers Committee for Civil Rights Under Law, Morgan, Lewis & Bockius in Miami, Florida, and Rosenberg & Estis, P.C., in New York. In 2007, Mayor Michael Bloomberg appointed Ms. Cruz to the New York City Rent Guidelines Board, where she represents the interests and concerns of the real estate community. Ms. Cruz is also an active member of the Association of the Bar of the City of New York, and the Association of Real Estate Women (AREW). She has also served on the Housing Court Advisory Council reviewing applicants for judicial positions; on the board of two cooperative apartment corporations; and as the Chair of After School Programming at a Brooklyn public school. Ms. Cruz is a licensed Real Estate Instructor and has lectured at the New York State Bar Association, the Association of the Bar of the City of New York, New York County Lawyers Association, and the Rent Stabilization Association. Ms. Cruz received her law degree from Georgetown University Law Center, and graduated magna cum laude from Pace University in New York City with a Bachelor of Business Administration. MCRUZ/ /509648

227 Jamie Heiberger Harrison, Esq. President & Founder, Heiberger & Associates, P.C. Jamie Heiberger is widely recognized as a leading female attorney in the Greater New York City real estate industry, having achieved unprecedented success while still in her mid-30s. That success derives from her ability to simultaneously think like a businessperson and a lawyer. Born and raised in Jericho, New York, her interest in the legal intricacies of the real estate market began at an early age. In 1990, after graduating with honors from the University of Michigan with a Bachelor of Arts in political science, she attended Brooklyn Law School, where she earned her Juris Doctorate in She was admitted to the New York State Bar in While still in law school, Jamie joined Lindenbaum & Young in Brooklyn Heights, a longstanding, well-respected landlord-tenant firm, where she assisted both in court and in the office, translating the vast scope of legal knowledge she had amassed into practical, hands-on experience in the complex New York real estate market. Jamie then moved with one of the firm's partners to his successor firm in Manhattan, Sperber, Denenberg and Barany, where she was a senior associate, handling heavy court work and where she started handling both contracts and closings. In 1996, at just 27 years old, having developed a strong passion for commercial and residential real estate, Jamie embraced the challenge of striking out on her own. That year, she founded Heiberger & Associates, P.C., a real estate law firm focusing on two major areas; 1- representation of commercial and residential building owners and management companies in all landlord-tenant legal needs; and 2- representation of lenders, Purchasers and Sellers of multifamily properties as well as individual cooperative & condominium units. Founding her firm on the fundamental principle that in both business and life the ability to quickly assimilate and act on new information is essential to growth, Jamie has expanded Heiberger & Associates over the last decade into a full-service real estate, litigation and transactional law firm. Nine full-time lawyers and 15 support-staff employees are separated into two Divisions; Landlord/Tenant and Transactional. To date, Heiberger & Associates has achieved significant success conducting litigation and providing legal advice for a wide variety of real estate transactions for residential and commercial properties. The firm has also represented major owners and developers, assisting them in the negotiation and eviction processes to remove both commercial and residential tenants to make way for new developments and condominium conversions. In 2008, Jamie set up a separate closing division to represent the sponsor in the sell-out of a large downtown Manhattan condominium. Jamie believes it is important to stay active and involved outside of the office as well. She demonstrates her commitment to the Greater New York City community through membership in the Community Housing Improvement Program, a trade association representing more than 2,500 apartment-building owners. CHIP has been a leading voice in city and state housing policy for nearly four decades on issues such as lead paint, property taxes, water rates, and rent regulation. Jamie is also a member of the Real Estate Board of New York (REBNY), the Association of Real Estate Women (AREW), the New York State Bar Association (NYSBA), and NYCREW. Additionally Jamie is also a good member of The Ruby Peck Foundation which supports children's education. Jamie recently became a State Court Appointed Receiver and Attorney for Receivers. After residing in New York City for over 20 years where she raised her twins, son Gavin and daughter Morgan, Jamie and her Husband Todd Harrison together with their daughter Ruby have moved to Port Washington on Long Island. As busy as she is helming a major metropolitan law firm, Jamie's family is her number one priority. While she's accessible to her clients round the clock, modern technology allows her to always be available for clients and family without missing a beat.

228 Joshua G. Losardo Bar Admissions: o New York, 1999 o U.S. District Court Southern District of New York, 2002 o U.S. District Court Eastern District of New York, 2002 Education: o JD, Brooklyn Law School, Brooklyn, New York, 1998 o BA, Binghamton University, Binghamton, New York JOSHUA G. LOSARDO joined Belkin Burden Wenig & Goldman, LLP in August Mr. Losardo was promoted to Partner in 2008, and represents our clients in both Administrative and Bankruptcy proceedings. Mr. Losardo's specialization concerns the regulation of real property, including rent stabilization, rent control and property tax exemption/abatement programs, such as 421a and J-51. Since joining BBW&G, Mr. Losardo has represented owners in hundreds of administrative proceedings before the New York State Division of Housing and Community Renewal, New York State Department of Law, and New York City Commission on Human Rights. He has successfully challenged many administrative decisions by bringing Article 78 special proceedings in State Supreme Court. In addition, Mr. Losardo represents both buyers and sellers of multiple family dwellings by conducting due diligence review and analysis of a building's rent history. Mr. Losardo also effectively defends creditors' rights in bankruptcy proceedings in both the Southern and Eastern Districts of New York by bringing various motions, including those seeking relief from the automatic stay, the payment of administrative rent and the conversion or dismissal of a bankruptcy case. Mr. Losardo's experience has enabled him to provide clients with efficient solutions to a diverse array of legal issues. Mr. Losardo earned a Juris Doctorate from Brooklyn Law School in 1998, and a Bachelor of Arts degree from Binghamton University in Areas of Practice: o o Real Estate Administrative Proceedings Bankruptcy & Creditors Rights

229 Kucker & Bruh Page 1 of 2 12/3/2014 HOME ABOUT PRACTICE AREAS ATTORNEYS FIRM NEWS CONTACT JAMES R. MARINO EDUCATION Brooklyn Law School Juris Doctor Gettysburg College Bachelor of Arts ADMISSIONS New York State Courts James is a partner at Kucker & Bruh, LLP, and a senior attorney whose practice areas include representing commercial and residential landlords in the City of New York. He specializes in rent control law,rent stabilization, residential real estate, and cooperative housing law. His expertise includes rent regulation including rent overcharge and service complaints, as well as luxury deregulation and demolition applications. All of the proceedings are before the Division of Housing and Community Renewal (DHCR). He also handles court appeals against the DHCR. In addition, James oversees the Major Capital Improvement (MCI) rent increase application process for clients. He handles all administrative violation matters that the firm's clients may face at the Environmental Control Board and the Department of Health. Jim Marino joined Kucker & Bruh, LLP in 1987 and has been a partner since For more than two decades, he has been advising landlords on New York City regulatory laws. Jim handles hundreds of rent overcharge and service complaints, luxury deregulation, demolition and Major Capital Improvement (MCI) rent increase applications. Jim also regularly handles administrative violation matters before State Agencies. Jim regularly advocates for landlords in the five boroughs of New York before the DHCR, Environmental Control Board, Department of Health and Department of Housing Preservation and Development. Landlords also benefit from Jim s extensive leasing experience which includes commercial and residential space. Further, he is able to organize and manage the due diligence lease reviews often required for real estate financing transactions. Jim is a regular contributor to the publication Landlord v. Tenant, has conducted lectures at the Rent Stabilization Association, the Community Housing Improvement Program (CHIP) and has been an instructor at New York University's Real Estate Institute, conducting a course entitled "Rent Control/Rent Stabilization: Procedures and Forms." Jim was also an instructor in the HPD's Housing Education series for property owners, conducting a course titled: "Introduction to DHCR."

230 Kucker & Bruh Page 2 of 2 12/3/2014 WEBSITE BY THE BERMAN GROUP ABOUT DISCLAIMER CONTACT 747 Third Avenue, New York, NY T F

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