It is often the case that a tenant defaults in a luxury deregulation proceeding, and that the Division of Housing and Community Renewal's (DHCR) rent administrator issues an order of deregulation. Although the governing statute appears to mandate a default if the tenant fails to answer, or answers late, Court of Appeals authority authorizes DHCR to forgive a default for “good cause shown.” As the DHCR orders discussed below establish, DHCR will frequently forgive tenant defaults and remand the proceeding to the Rent Administrator for a determination on the merits.

DHCR's capacity for forgiveness, however, is not unlimited. In several recent cases, DHCR has refused to vacate a default, and has ordered that the apartment be deregulated.

The Statute

Section 26-504.3 of the Rent Stabilization Law provides for the luxury deregulation of apartments renting above the rent deregulation threshold (currently $2,700 or more per month) where the tenant's income exceeds the income threshold (currently $200,000 per year). Section 26-504.3(c)(1) states that DHCR shall serve the owner's petition for deregulation on the tenant, and that the tenant shall have 60 days to answer the petition and provide DHCR with information allowing the Department of Taxation and Finance to verify the tenant's income. Section 26-504.3(c)(3) states that if the “tenant or tenants fail to provide the information required pursuant to subparagraph one of this subdivision, [DHCR] shall issue… an order providing that such housing accommodation shall not be subject to the provisions of this law upon the expiration of the current lease.”