MALINA v. 158 MANAGEMENT LLC (2026)

Order, Supreme Court, New York County (Mary V. Rosado, J.), entered on or about July 22, 2025, which, to the extent appealed from as limited by the briefs, granted plaintiffs' motion for summary judgment declaring apartment 51 as rent stabilized and setting the legal regulated rent at $1,092.41, unanimously affirmed, without costs.  Appeal from order, same court and Justice, entered on or about July 22, 2025, which denied defendants' motion for summary judgment dismissing the complaint, unanimously dismissed, without costs, as abandoned.

Plaintiffs established that apartment 51 was not properly deregulated and defendants failed to raise triable issues of fact.  Defendants failed to explain the conflict between the apartment 51 leases entered into the record and the New York State Division of Housing and Community Renewal (DHCR) rent registrations for the unit.  The DHCR registration history showed that apartment 51 was registered as occupied by rent stabilized tenants on January 7, 2015, which conflicts with a market rate lease issued to a different tenant that commenced on May 1, 2014.  Defendants registered the apartment as stabilized but vacant on December 14, 2015;  November 18, 2016;  and December 19, 2017, despite plaintiff Ty Atkin entering a market rate lease on August 1, 2015.

On April 4, 2022, after this action was commenced, defendants registered the apartments as deregulated due to high rent vacancy as of the 2018 reporting year, despite Atkin's continued tenancy through the entirety of 2018.  Defendants did not explain these inconsistences beyond a vague assertion that they hired a third-party vendor to complete DHCR registrations who must have made mistakes.

Defendants also failed to show compliance with the statutory and regulatory framework that was in place at the time they claimed the apartment was deregulated.  The market rate leases issued in 2014 and 2015, which defendants purport were issued after the apartment was renovated, did not include vacancy-lease notices nor disclose any basis for high-rent vacancy deregulation.  The absence of required notices is an indicator of improper deregulation (see Matter of AEJ 534 E. 88th LLC v New York State Div. of Hous. & Community Renewal, 194 AD3d 464, 471 [1st Dept 2021], citing Rent Stabilization Law of 1969 [Administrative Code of City of NY] § 26–504.2[a] ).

Defendants failed to raise a triable issue of fact as to whether apartment 51 was subject to high rent vacancy deregulation due to individual apartment improvements (IAIs), as they did not submit invoices, contracts, or checks specific to apartment 51, or provide testimony that could tie any renovation records to apartment 51 (see Jemrock Realty Co., LLC v. Krugman, 13 NY3d 924, 926 [2010];  Altschuler v. Jobman, LLC, 135 AD3d 439, 440 [1st Dept 2016], lv denied 29 NY3d 903 [2017] ).  Even assuming that the Department of Buildings work permit submitted by defendants reflected a fair approximation of renovation work completed to apartment 51, defendants failed to establish that they made “sufficiently costly improvements ․ to permit them to remove the apartment from rent regulation” (Chekowsky v. Windemere Owners LLC, 114 AD3d 541, 541 [1st Dept 2014] ).

Supreme Court denied summary judgment as to three apartments where the record indicates that they were registered contemporaneously with claimed vacancies and deregulations, and where the registered dates leave a possibility that at least some renovation work was completed.  Conversely, because defendants failed to account for an actual vacancy in apartment 51 or sufficiently explain the scope and timeline of their claimed renovation work in that apartment, and because the DHCR registration for apartment 51 did not align with any evidence of IAIs, defendants failed to establish that a triable issue of fact exists.

Supreme Court properly set the legal regulated rent at $1,092.41, the last reliable registered stabilized rent as of the base date (see Rent Stabilization Code [9 NYCRR] §§ 2520.6[f][2], 2526.7).  Where, as here, “an owner fails to file a ‘proper and timely’ registration, until such registration is filed, the rent is frozen at the legal regulated rent listed in the preceding registration statement” (Bradbury v. 342 W. 30th St. Corp., 84 AD3d 681, 684 [1st Dept.2011];  see Rent Stabilization Code § 2528.4[a] ).

There is no indication that the court precluded defendants from subsequently adjusting the rent based on their statutory compliance (see Rent Stabilization Law § 26–517[e] ).

We have considered defendants' remaining arguments and find them unavailing.