Effective June 14, 2019, the NY State Legislature enacted the Housing Stability and Tenant Protection Act (HSTPA), which, inter alia, repealed “luxury deregulation”, i.e., a landlord’s right to deregulate apartments upon vacancy when the legal rent reached a certain threshold or through an order issued by the NYS Division of Housing and Community (DHCR) based upon certain income and rent levels. The theory of the latter method was that wealthy people should not reap the benefit of an artificially low regulated rent which, in effect, is a privately funded (by landlords) subsidy. Deregulation of those apartments became effective upon the expiration of the lease in effect at the time the order was issued. 

As former Court of Appeals Judge Fahey aptly noted in oral argument on Jan. 7, 2020, in Regina Metropolitan Co., LLC v. NYS Div. of Hous. & Cmty. Renewal, 35 N.Y.3d 332 (decided April 2, 2020), the law changed because the politics changed. The issue in that matter was whether the HSTPA could be applied retroactively; the Court, by a 4-3 margin, ruled against retroactivity in a decision that was clearly supported by United States Supreme Court precedent that includes a presumption against retroactive application of a statute. Judge Fahey and the two most progressive judges on the panel, Judges Rivera and Wilson, dissented. 

The Regina Metro. decision is illustrative of how our system of jurisprudence and tripartite checks and balances form of government is supposed to work; when lawmakers push their political agendas too far, the courts are the “check” on their power. Unfortunately, at least since 2019 when the Democrats became the majority, the NYS Legislature has done all that it could to upset the checks and balances through what I believe was and continues to be a gross abuse of power, inclusive of blocking the appointment of a moderate judge as Chief Judge of the Court of Appeals in favor of one who is progressive (and thus, to state the obvious, one more likely to rule according to the legislature’s own ideology). 

DHCR’s Use of ‘Explanatory Addenda’

Fast forward to today, and the Court of Appeals Dec. 19, 2024, decision in Matter of 160 E. 84th St. Assoc. LLC v. NYS Div. of Hous. & Cmty. Renewal, - N.E.3d -, 2024 NY Slip. Op. 06377, and eight companion appeals. There, the Court affirmed the Appellate Division, First Department’s ruling that apartments for which final, non-appealable, non-challengeable orders of deregulation issued by the DHCR over which the agency no longer had jurisdiction could effectively be annulled by subsequent orders mis-characterized as “Addenda” if the lease in effect at the time of the order expired subsequent to the June 14, 2019, repeal of luxury deregulation. 

A highlight of the Court of Appeals’ decision is the statement that the orders in question were “contingent on the lease expiring before the HSTPA took effect.” The actual language of the orders is, in pertinent part, “that the subject housing accommodation is deregulated, effective upon the expiration of the existing lease.” That is not a “contingency,” since there was a certainty the leases in question would expire on a date certain (since all rent-stabilized leases are for either one- or two-year terms, at the tenant’s option). 

The decision relies on the statement that once the HSTPA became law on June 14, 2019, “there ceased to be any provision in New York Law for an apartment to become luxury deregulated.” 

This ignores numerous issues that were raised, including that of the impermissible retroactive effect on prior orders. While the repeal negated the right to seek luxury deregulation, it contains no language that remotely addresses prior, final orders or that suggests that if the lease expired post-HSTPA the prior order should be annulled. The fact that there is no longer a methodology permitting deregulation does not equate to annulling orders issued at a time when it was available; nor is there any legislative history to suggest this was an intended result of the repeal of luxury deregulation. 

The decision failed to address numerous points made by appellants-owners that appeared irrefutable, instead relying upon the all too familiar “remaining arguments lack merit.” That is all too easy for a court to state. It would be a lot easier to accept the decision had the court addressed those arguments, which were the following that, I submit, would have required a contrary ruling: 

• The luxury deregulation orders were final, binding and no longer subject to challenge at the time the HSTPA was enacted on June 14, 2019. 
• Once the time to challenge a DHCR order expires the agency only has jurisdiction to annul or modify it on the grounds of irregularity in a vital matter, fraud, or illegality, all of which are inapplicable to the subject orders. 
• The DHCR no longer had jurisdiction to issue the purported “Explanatory Addenda.” 
• General Construction Law Section 93: An amended statute or its repeal cannot affect pre-existing rights; the Court of Appeals held this unequivocally in 850 Co. v Schwartz, 15 N.Y.2d 889 (1965). 
• Owners had vested rights pursuant to the orders; a vested right is an immediate right of present or future enjoyment. 
• There was no contingency, there was an absolute certainty to the luxury deregulation orders. The Court’s decision notes that the deregulation orders were effective upon expiration of the lease, which was known to all parties and would occur on a date certain. In other words, the orders were self-operative. 
• The HSTPA’s repeal of the luxury deregulation provisions merely took away the means to apply for deregulation on this basis after June 14, 2019. 
• No legislative history supports the DHCR’s interpretation of the HSTPA to claw back final orders. 

In my opinion, the Court’s decision is unsupported by the language it utilized. That would not have been true had the above points been addressed; if they had been, it is hard to fathom the result would have been the same or, if not, that the decision would have made any sense. 

Niles C. Welikson, Esq. is a founding member and special counsel to Horing Welikson Rosen & Digrugilliers PC, the attorneys for the owner in both Regina Metro and Matter of 160 E. 84th St. Assoc.