Bryant Ave. Tenants’ Ass’n v. Koch, 71 N.Y.2d 995 (1988)
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A regulation permitting the collection of temporary retroactive rent increases in addition to prospective, permanent rent increases, resulting in a total increase exceeding 6% in a single year, violates Rent Stabilization Law § 26-511 (c)(6).
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Summary
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This case addresses the legality of a regulation issued by the Division of Housing and Community Renewal (DHCR) that allowed landlords to collect both temporary retroactive rent increases and prospective, permanent rent increases for major capital improvements (MCIs), potentially exceeding the 6% annual limit set by the Rent Stabilization Law. The Court of Appeals held that the regulation was invalid to the extent it permitted collecting more than a 6% rent increase in any single year. However, the Court upheld the practice of merging MCI rent increases into the base rent, even with the compounding effect, as consistent with the law’s intent to incentivize improvements.
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Facts
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The Division of Housing and Community Renewal’s (DHCR) Rent Stabilization Code (9 NYCRR 2522.4 [a] [8]) permitted landlords to collect temporary retroactive rent increases of up to 6% annually in addition to prospective, permanent rent increases of up to 6% annually for major capital improvements (MCIs). This allowed landlords to recoup arrears accumulated during the administrative delay in processing MCI rent increase applications. This meant a tenant could see up to a 12% rent increase in a given year.
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Procedural History
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The case originated from a challenge to the DHCR regulation. The lower courts likely ruled on the validity of the regulation before the case reached the Court of Appeals. The Court of Appeals reviewed the lower court’s decision and modified it.
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Issue(s)
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1. Whether DHCR’s regulation permitting collection of temporary retroactive rent increases of up to 6% annually in addition to prospective, permanent rent increases of up to 6% annually for major capital improvements (MCIs), resulting in a total increase exceeding 6% in a single year, violates Rent Stabilization Law § 26-511 (c)(6)?
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2. Whether the merger of MCI rent increases into the base rent of stabilized tenants, and any resulting compounding effect caused by the application of rent guideline increases to the increased base rent, is proper under Rent Stabilization Law §26-511 (c)?
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Holding
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1. Yes, because Rent Stabilization Law § 26-511 (c)(6) clearly states that