Matter of LL 410 E. 78th St. LLC v Division of Hous. & Community Renewal, 2025 NY Slip Op 01672 (2025)

DHCR’s interpretation of its own regulations governing the amendment of rent registration statements is entitled to substantial deference, and limitations on the types of amendments accepted are permissible if rationally exercised.

Summary

The case involves a landlord’s attempt to amend prior rent registration statements to reflect an apartment’s change in regulatory status, arguing it was incorrectly listed as rent-stabilized. DHCR denied the amendment, citing a policy allowing only ministerial corrections. The Court of Appeals affirmed, holding that DHCR’s interpretation of the Rent Stabilization Code (RSC), which allows restrictions on registration amendments to protect tenants and preserve agency resources, was rational. The court deferred to DHCR’s expertise in interpreting its own regulations, finding the agency’s actions were not arbitrary or capricious. The dissenting opinion argued the restrictions were not supported by the RSC’s text and that DHCR’s application of the rule was inconsistent and arbitrary.

Facts

LL 410 E. 78th St. LLC (Petitioner) owned an apartment building in Manhattan. Petitioner sought to amend its 2016 and 2017 annual registration statements, claiming unit 1B, occupied by the building’s superintendent, was erroneously listed as temporarily rent-stabilized due to owner/employee occupancy. Petitioner asserted unit 1B should have been listed as permanently exempt due to high-rent vacancy decontrol in 2002. DHCR’s Rent Administrator denied the application, allowing amendments only for ministerial errors, not those changing the unit’s rent history or status. The Deputy Commissioner upheld this decision. Petitioner commenced an Article 78 proceeding.

Procedural History

The Rent Administrator denied Petitioner’s application. The Deputy Commissioner of DHCR denied administrative review. The Supreme Court denied Petitioner’s CPLR Article 78 petition, upholding DHCR’s determination. The Appellate Division, First Department, unanimously affirmed the Supreme Court’s decision. The Court of Appeals granted leave to appeal.

Issue(s)

1. Whether DHCR’s interpretation of the RSC, which allows limitations on amending registration statements, is permissible.

2. Whether DHCR’s denial of Petitioner’s amendment application was arbitrary and capricious.

Holding

1. Yes, because DHCR has discretion over the types of amendments to accept, and its interpretation, designed to protect tenants and conserve resources, is rational.

2. No, because DHCR’s denial of the application was based on a rational interpretation of its regulations and was not arbitrary or capricious.

Court’s Reasoning

The court emphasized the deference given to DHCR’s interpretation of its own regulations. It noted that the RSC provides for registration of rent-stabilized accommodations but is silent on the amendment process. DHCR’s 2014 regulation (RSC § 2528.3[c]) allows amendments but gives DHCR discretion to determine their “propriety.” The court found that DHCR’s limiting principle—allowing only