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Apartments subject to Rent Stabilization because Landlord Receives J-51 or 421-a tax abatement

If a landlord receives a tax abatement base on new construction or major renovations, the building becomes subject to rent stabilization. The rent stabilization coverage remains in effect for approximately twenty (20) years.

In an new building which receives a tax abatement, the actual rent charged becomes the legal rent for the apartment. Thus, any concession which a landlord makes to its first tenant is calculated into the base rent. The preferential rent is the basis for all future rent increase.

In many new rent stabilized buildings, landlords only offer a fourteen (14) month rent stabilized lease. The tenant is entitled to his choice of a one (1) or two (2) year lease. The tenant should accept the lease and then file a complaint with the DHCR based on the landlord’s failure to offer the required two year lease option.

A landlord must give the tenant notice in its initial lease and all renewal leases of the fact that a tax abatement is in effect for the building and will expire on a certain date and that after that date the apartment will no longer be rent stabilized If the landlord fails to give this notice on even one occasion, then the apartment will remain rent stabilized during the entire term of the tenant’s tenancy, even after the abatement expires.

Issues of Rent Stabilization coverage in tax abated buildings tend to be very complicated and time consuming. Parties should speak with an attorney before proceeding. We offer complimentary consultations and you are welcome to schedule your complimentary-no obligation consultation by calling us at 212-921-1600.

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