Deciding Whether to Amend Old Registrations

The recent amendments to the Rent Stabilization Code (RSC) have complicated an owner’s decision whether to amend old rent registrations. Here are a few new factors owners now have to consider:

Will I have to start a DHCR proceeding? Under the recent RSC amendments, the automatic right to amend registrations has been restricted to registrations an owner seeks to amend in the same year when it is due. While the DHCR takes pains in its commentary to point out that there was never an automatic right to amendments going back forever, it also acknowledges that the uniform office practice was to permit such registration amendments prior to the RSC amendments. Now the RSC amendments require that the landlord seeking to file such an amendment has to start a proceeding before the DHCR.

Will I have to pay a penalty? The DHCR writes, “These amendments, if treated similarly to ‘late’ registrations under the RSL, could carry a substantial penalty, but no penalty has been imposed.”

What both the amendments and their commentary make unclear is whether the implied threat of such penalty against the landlord for such amendment proceedings will actually be the DHCR’s routine action. This will therefore mean that some landlords are going to have to be the pioneers to find out in this game of “truth or dare” how the new regulation is going to be enforced.

Most attorneys will therefore probably switch from advising their clients to file amendments to advising their clients not to—at least until the consequences are clear.

Will amending reset the four-year clock in my favor? There has always been a reason not to file registration amendments: that where a registration is four years old or more, it is in many instances, immune from being examined. However, when an amendment is filed, it starts the four-year clock all over again. One benefit of the new procedure should be that anytime the DHCR does authorize an amendment, it will be actually bulletproof as soon as the time for appeals of such an order has expired. This is vastly less than four years.

Do I have the current forms? The amendments also allow for the DHCR to change its registration forms every year. The benefit to the DHCR, according to its commentary, is to increase its ability “to capture data appropriate for the administration and enforcement of the RSL and RSC.” The DHCR does not consider the administrative expense to owners having to learn a new set of forms potentially every year.