RENT OF $2,000 OR MORE UNDER STABILIZATION

Lucas A. Ferrara
New York Times Real Estate Section
February 27, 2005

Q.  I live in a rent-stabilized apartment and pay $1,950 a month. With my next lease renewal, which comes in 2007, the rent will exceed $2,000. Does that mean my apartment is removed from stabilization at the time of the lease renewal in 2007, or will the apartment be taken out of stabilization at the beginning of the next renewal in 2009? ... Ryo Hayashi, Manhattan.

A.  Lucas A. Ferrara, a Manhattan real estate lawyer, said that occupied rent-regulated apartments in which the legal rent is $2,000 or more may be deregulated only if the tenant's adjusted gross annual household income exceeds $175,000 in each of the two preceding calendar years. (A vacant stabilized apartment is deregulated if the rent is $2,000 or more.)

If the letter writer's annual household income is less than $175,000, the landlord cannot deregulate the apartment just because the rent reaches $2,000, Mr. Ferrara said. Even if the writer met the income threshold for two years running, and the rent reaches $2,000, deregulation is not automatic.

"A landlord is required to serve a tenant with an income certification form on or before May 1 of a given year," Mr. Ferrara said, adding that if, after the form is returned, the landlord believes the apartment is eligible for deregulation, he must file a deregulation petition with the State Division of Housing and Community Renewal no later than June 30 of that same year.

If a tenant does not respond within 30 days, the landlord can file the petition, and the agency asks state tax officials to review the tenant's tax returns. "If a landlord misses this window period, the process is delayed until the following year," he said.

So if the rent reaches $2,000 on or before May 1, 2007, and the landlord has served the income certification form and determined that the tenant's household income exceeded $175,000 in the preceding two years, the landlord can apply for deregulation until June 30. But if the rent reaches $2,000 after May 1, the landlord would have to wait until the next year to file the certification form and the deregulation petition. The deregulation becomes effective only when the state agency issues a deregulation order.