Substantially Rehabilitated Properties: Significant Impact of Pending NYS Legislation

by | Jun 12, 2023 | Industry Updates

As many of you are aware, on June 9, 2023, the New York State Senate passed two bills which seek to significantly impact rent stabilized properties and to reverse the protections provided by the Court of Appeals in the Regina decision: S2943B and S2980C (“the Bills”). Although they passed the Senate in the last remaining hours of the current legislative session, the Assembly adjourned without voting on the Bills. While this is good news, it may only be a temporary reprieve, because the Assembly will reportedly reconvene “in the near future” to “complete unfinished work.”

We are writing to notify you of a specific portion of the Bills which may require your immediate attention. Part A, Section 5 of S2980C provides that an owner claiming exemption from rent stabilization on the basis of substantial rehabilitation is required to file an application with DHCR for an administrative determination within one year of the work’s completion or within six months of the Bills becoming law.

We are bringing this to your attention now because it will likely be a significant and time-consuming undertaking to assemble the documents necessary for a substantial rehabilitation application, particularly in instances where the work was completed many years ago, such that you may want to begin the process now. We hope that the Assembly and Governor consider how damaging the Bills are from a legal, economic and policy standpoint. However, in anticipation of the Bills’ possible passage, we recommend that you begin gathering the necessary documents. Please reach out to us if you would like our assistance in organizing and preparing your documentary package in support of a substantial rehabilitation exemption application.

If you have any questions, please contact your trusted R&E attorney or Zachary J. Rothken, Head of the firm’s Administrative Law Department, who authored the above.