High-Rent Vacancy Deregulation of Rent-Stabilized Apartment

Q How have the Rent Code Amendments of 2014 (RCA 2014) changed the process for deregulating rent-stabilized apartments through high-rent vacancy? Are there any additional forms to fill out?

A As before RCA 2014, if a rent-stabilized apartment with a legal regulated rent of $2,500 or more per month is vacated, the apartment qualifies for permanent deregulation, and therefore for removal from all rent regulation.

Where an owner installs new equipment or makes improvements qualifying for an individual apartment improvement rent increase while a rent-stabilized apartment is vacant, and the legal regulated rent is raised on the basis of such a rent increase, or as a result of any rent increase permitted upon vacancy or succession, or by a combination of rent increases to a level of $2,500 or more per month, whether or not the next tenant in occupancy actually is charged or pays $2,500 or more per month, that apartment will qualify for deregulation.

An apartment also qualifies for deregulation if, while it’s vacant, the owner substantially alters its outer dimensions, creating a “new” apartment, and the rent paid by the first tenant after the alteration is $2,500 or more per month. An apartment will also qualify for deregulation upon vacancy by a tenant who was charged and paid a preferential rent of less than $2,500 per month and a higher legal regulated rent has been established.

Before the RCA 2014 was enacted, apartments that became permanently exempt since the last registration were filed as permanently exempt for the last time with the DHCR on the next annual registration cycle. This filing served as an “exit” registration and removed the apartment from rent stabilization.

Now, in addition to the exit registration, the DHCR has created a vacancy deregulation notice (HRVD-N) that didn’t exist prior to RCA 2014. This notice must be served on the first tenant of a deregulated unit. The new notice requires the owner to provide the basis for deregulation, show the rent computation, and state the last legal regulated rent. You can download this notice at www.nyshcr.org/Rent/RentCodeAmendments/HRVD-N-SJ.pdf.

RCA 2014 also established the timing and method of serving the first deregulated tenant with a copy of an “exit registration.” First, the owner must either send the new notice by certified mail within 30 days after the tenancy commences or provide it to the tenant after the signing of the lease by both parties, whichever occurs first.

And second, the owner must serve an exit registration within 30 days after the tenancy commences. In the alternative, the notice can be delivered to the tenant at the time the lease is executed by both parties.