File High-Income Rent Deregulation Form by June 30

If you have a tenant who’s paying a monthly rent of $2,774.76 or more for a rent-controlled or rent-stabilized apartment, it might be time to submit online the second of two Division of Housing and Community Renewal (DHCR) forms that may eventually lead to deregulation of the apartment. If you miss the deadline, you’ll have to wait until next year to apply for deregulation.

The first form, which had to be sent to the tenant by May 1, 2019, is an Income Certification Form (ICF) that the DHCR uses to determine whether the tenant and other occupants of a high-rent apartment have a high income. A high-rent apartment is one with a monthly rent of $2,774.76 or more. And a high income is defined as a combined federal adjusted gross income of more than $200,000 in each of the past two calendar years.

When to Send Second Form

If a tenant returned the ICF to you and it shows income of more than $200,000 for each of the past two years, or if the tenant doesn’t return the form on time, you can ask the DHCR to deregulate the apartment. To do this, you must file a second form—a deregulation petition—with the DHCR. The form’s title is “Petition by Owner for High-Income Rent Deregulation 2019 Filing Period.” Owners must file this application online at http://www.nyshcr.org/Apps/ORAOwner by June 30, 2019.  

If you previously used the ORRA system to file annual rent registrations or the other available owner applications, your user ID and password will be the same for this year. If you haven’t previously used the system, you can email PSU@nyshcr.org to request access to the ORRA system and receive a user ID and password via email.

Even if the tenant claims an income of $200,000 or less in either 2017 or 2018 on the ICF, you should still file the deregulation petition if you have reason to believe that the tenant wasn’t truthful. The DHCR will then check the tenant’s income information against the records of the New York State Department of Taxation and Finance.

Tenant Gets Chance to Respond

After you file your deregulation petition with the DHCR, the DHCR sends it to the tenant and gives the tenant 60 days to respond. If the tenant doesn’t respond, the DHCR should issue an order deregulating the apartment. If the tenant responds after the 60-day deadline, the DHCR may still take into account the tenant’s response, after considering such factors as the reason for and length of the delay. If the tenant had a good reason for not responding on time or if the delay was a short one, the DHCR will consider the tenant’s response in deciding whether to deregulate the apartment.

Unreturned Income Certification Forms

If a tenant hasn’t returned the ICF, you can still file for deregulation. In one case, an owner applied in 2011 for high-rent/high-income deregulation of a tenant’s rent-stabilized apartment. At the time, the Rent Act of 2011 wasn’t applicable, so the old household income and monthly legal regulated rent thresholds applied. Here, the tenant’s monthly rent was $2,000 or more, and the owner sought verification of tenant’s household income for 2009 and 2010.

The district rent administrator dismissed the owner’s application because the owner failed to attach a copy of the ICF that it was required to send the tenant before filing the application. However, the owner appealed and won.

The owner pointed out that the tenant never filled out and returned the ICF to the owner. Under Rent Stabilization Code (RSC) Section 2531.4, the owner wasn’t required to attach a copy of the ICF with its application. This code section covered situations where a tenant didn’t return the ICF to the owner. In contrast, under RSC Section 2531.3, if the tenant had filled out and returned the ICF to the owner and certified that his income exceeded the deregulation threshold, the owner was required to submit this form with its application [120 West 86th Street LLC: DHCR Adm. Rev. Docket No. BM410009RP, February 2013].

Occupancy During Prior Tax Years

According to one DHCR decision, the relevant date for determining occupancy for the luxury deregulation process is the date the owner sent the tenant the ICF. Therefore, deregulation applied to a new tenant who didn’t live in apartment during prior tax years.

The owner applied for high-rent/high-income deregulation of the tenant’s rent-stabilized apartment in 2018, claiming that the legal rent was $2,733.75 or more. The tenant had admitted in the ICF that her annual household income exceeded $200,000 in both 2016 and 2017. The district rent administrator ruled for the owner and deregulated the apartment.

The tenant appealed and lost. She argued that she moved into the apartment in March 2018 and didn’t live there during 2016 and 2017. But that didn’t matter. The relevant date for determining occupancy of the apartment for luxury deregulation purposes is the date that the owner sent the tenant the ICF. In this case, that was in April 2018, when tenant was in occupancy [Eagan: DHCR Adm. Rev. Docket No. GT110018RT, December 2018].