Subchapter B of Chapter VIII of Subtitle S of Title 9 NYCRR

The Rent Stabilization Code as amended and adopted pursuant to the powers granted to the Division of Housing and Community Renewal by section 26-511(b) of the Administrative Code of the City of New York, as recodified by Laws of 1985, Chap. 907, section 1 (formerly section YY51-6.0[b] as amended by Laws of 1985, Chap. 888, section 2), and section 26-518(a) of such Code, as recodified by Laws of 1985, Chap. 907, section 1 (formerly section YY51-6.1[a] as added by Laws of 1985, Chap. 888, section 8), is amended to read as follows:

PART 2520 SCOPE

Section 1

Subdivision (c) of section 2520.6 of this Part is amended to read as follows:

(c) Rent. Consideration, charge, fee or other thing of value, including any bonus, benefit or gratuity demanded or received for, or in connection with, the use or occupation of housing accommodations or the transfer of a lease for such housing accommodations. Rent shall not include surcharges authorized pursuant to section 2522.10 of this Title.

Section 2

Subdivision (e) of section 2520.6 of this Part is repealed, and a new subdivision (e) is adopted to read as follows:

(e) Legal Regulated Rent. The rent charged on the base date set forth in subdivision (f) of this section, plus any subsequent lawful increases and adjustments.

Section 3

Subdivision (f) of section 2520.6 of this Part is repealed, and a new subdivision (f) is adopted to read as follows:

(f) Base date. For the purpose of proceedings pursuant to sections 2522.3 and 2526.1 of this Title, base date shall mean the date which is the most recent of:

(1) The date four years prior to the date of the filing of such appeal or complaint; or

(2) The date on which the housing accommodation first became subject to the RSL; or

(3) April 1, 1984, for complaints filed on or before March 31, 1988 for housing accommodations for which initial registrations were required to be filed by June 30, 1984, and for which a timely challenge was not filed.

Section 4

Subdivision (i) of section 2520.6 of this Part is amended to read as follows:

(i) Owner. A fee owner, lessor, sublessor, assignee, net lessee, or a proprietary lessee of a housing accommodation in a structure or premises owned by a cooperative corporation or association, or an owner of a condominium unit or the sponsor of such cooperative corporation or association or condominium development, or any other person or entity receiving or entitled to receive rent for the use or occupation of any housing accommodation, or an agent of any of the foregoing, but such agent shall only commence a proceeding pursuant to section 2524.5 of this Title, in the name of such foregoing principals. Any separate entity that is owned, in whole or in part, by an entity that is considered an owner pursuant to this subdivision, and which provides only utility services shall itself not be considered an owner pursuant to this subdivision. Except as is otherwise provided in sections 2522.3 and 2526.1(f) of this Title, a court-appointed Receiver shall be considered an owner pursuant to this subdivision.

Section 5

Subdivision (n) section 2520.6 of this Part is amended to read as follows:

(n) Immediate family. A husband, wife, son, daughter, stepson, stepdaughter, father, mother, stepfather, stepmother, brother, sister, grandfather, grandmother, grandson, [or] granddaughter, father-in-law, mother-in-law, son-in-law or daughter-in-law of the owner.

Section 6

Paragraph (1) of subdivision (o) of section 2520.6 of this Part is amended to read as follows:

(1) A husband, wife, son, daughter, stepson, stepdaughter, father, mother, stepfather, stepmother, brother, sister, [nephew, niece, uncle, aunt,] grandfather, grandmother, grandson, granddaughter, father-in-law, mother-in-law, son-in-law or daughter-in-law of the tenant or permanent tenant; or

Section 7

Subdivision (s) of section 2520.6 of this Part is amended to read as follows:

(s) Documents. Records, books, accounts, correspondence, memoranda and other documents, and copies, including microphotographic or electronically stored or transmitted copies, of any of the foregoing.

Section 8

Subdivision (t) of section 2520.6 of this Part is amended to read as follows:

(t) Final order. A final order shall be an order of a rent administrator not appealed to the commissioner within the period authorized pursuant to section 2529.2 of this Title, or an order of the commissioner, unless such order remands the proceeding for further consideration.

Section 9

Section 2520.6 of this Part is amended by adopting a new subdivision (u) to read as follows:

(u) Primary residence. Although no single factor shall be solely determinative, evidence which may be considered in determining whether a housing accommodation subject to this Code is occupied as a primary residence shall include, without limitation, such factors as listed below:

(1) Specification by an occupant of an address other than such housing accommodation as a place of residence on any tax return, motor vehicle registration, driver's license or other document filed with a public agency;

(2) Use by an occupant of an address other than such housing accommodation as a voting address;

(3) Occupancy of the housing accommodation for an aggregate of less than 183 days in the most recent calendar year, except for temporary periods of relocation pursuant to section 2523.5(b)(2) of this Title;

(4) Subletting of the housing accommodation.

Section 10

Subdivision (c) of section 2520.11 of this Part is amended to read as follows:

(c) housing accommodations for which rentals are fixed by the DHCR or HPD, unless, after the establishment of initial rents, the housing accommodations are made subject to the RSL pursuant to applicable law, or housing accommodations subject to the supervision of the DHCR or HPD under other provisions of law or the New York State Urban Development Corporation, or buildings aided by government insurance under any provision of the National Housing Act to the extent the RSL or any regulation or order issued thereunder is inconsistent with such act. However, housing accommodations in buildings completed or substantially rehabilitated prior to January 1, 1974, and whose rentals were previously regulated under the PHFL or any other State or Federal law, other than the RSL or the City Rent Law, shall become subject to the ETPA, the RSL, and this Code, upon the termination of such regulation. [An owner of such housing accommodations shall not be eligible for a rent adjustment pursuant to section 2522.4(b) or (c) of this Title, for a period of three years, where such owner would not qualify for such rent adjustment in the absence of a voluntary dissolution, termination, or reconstitution pursuant to the PHFL or other State or Federal laws;]

Section 11

Subdivision (e) of section 2520.11 of this Part is amended to read as follows:

(e)housing accommodations in buildings completed or buildings substantially rehabilitated as family units on or after January 1, 1974, except such buildings which are made subject to this Code by provision of the RSL or any other statute that meet the following criteria, which, at the DHCR's discretion, may be effectuated by Operational Bulletin:

(1) a specified percentage, not to exceed 75%, of listed building-wide and individual housing accommodation systems, must have been replaced;

(2) for good cause shown, exceptions to the criteria stated herein or effectuated by Operational Bulletin, regarding the extent of the rehabilitation work required to be effectuated building-wide or as to individual housing accommodations, may be granted where the owner demonstrates that a particular component of the building or system has recently been installed or upgraded, or is structurally sound and does not require replacement, or that the preservation of a particular component is desirable or required by law due to its aesthetic or historic merit;

(3) the rehabilitation must have been commenced in a building that was in a substandard or seriously deteriorated condition. The extent to which the building was vacant of residential tenants when the rehabilitation was commenced shall constitute evidence of whether the building was in fact in such condition. Where the rehabilitation was commenced in a building in which at least 80% of the housing accommodations were vacant of residential tenants, there shall be a presumption that the building was substandard or seriously deteriorated at that time. Space converted from non-residential use to residential use shall not be required to have been in substandard or seriously deteriorated condition for there to be a finding that the building has been substantially rehabilitated;

(4) except in the case of extenuating circumstances, the DHCR will not find the building to have been in a substandard or seriously deteriorated condition where it can be established that the owner has attempted to secure a vacancy by an act of arson resulting in criminal conviction of the owner or the owner's agent, or the DHCR has made a finding of harassment, as defined pursuant to any applicable rent regulatory law, code or regulation;

(5) in order for there to be a finding of substantial rehabilitation, all building systems must comply with all applicable building codes and requirements, and the owner must submit copies of the building's certificate of occupancy, if such certificate is required by law, before and after the rehabilitation;

(6) where occupied rent regulated housing accommodations have not been rehabilitated, such housing accommodations shall remain rent regulated until vacated, notwithstanding a finding that the remainder of the building has been substantially rehabilitated, and therefore qualifies for exemption from regulation;

(7) where, because of the existence of hazardous conditions in his or her housing accommodation, a tenant has been ordered by a governmental agency to vacate such housing accommodation, and the tenant has received a court order or an order of the DHCR that provides for payment by the tenant of a nominal rental amount while the vacate order is in effect, and permits the tenant to resume occupancy without interruption of the rent stabilized status of the housing accommodation upon restoration of the housing accommodation to a habitable condition, such housing accommodation will be excepted from any finding of substantial rehabilitation otherwise applicable to the building. However, the exemption from rent regulation based upon substantial rehabilitation will apply to a housing accommodation that is subject to a right of reoccupancy, if the returning tenant subsequently vacates, or if the tenant who is entitled to return pursuant to court or DHCR order chooses not to do so;

(8) an owner may apply to the DHCR for an advisory prior opinion that the building will qualify for exemption from rent regulation on the basis of substantial rehabilitation, based upon the owner's rehabilitation plan;

(9) specified documentation will be required from an owner in support of a claim of substantial rehabilitation;

Section 12

Subdivision (l) of section 2520.11 of this Part is amended to read as follows:

(l) housing accommodations contained in buildings owned as cooperatives or condominiums on or before June 30, 1974; or thereafter, as provided in section 352-eeee of the General Business Law in accordance with section 2522.5(h) of this Title, provided, however, and subject to the limitations set forth in subdivisions (e), (o) and (p) of this section, that:

(1) Where cooperative or condominium ownership of such building no longer exists ("deconversion"), because the cooperative corporation or condominium association loses title to the building upon a foreclosure of the underlying mortgage or otherwise, or where the conversion of the building to cooperative or condominium ownership is revoked retroactively by the New York State Attorney General to the date immediately prior to the effective date of the Conversion Plan on the basis of fraud or on other grounds, such housing accommodations shall revert to regulation pursuant to the RSL and this Code, and the regulated rents therefor shall be as follows:

(i) Housing accommodations not occupied at the time of deconversion.

(a) Where deconversion occurs four years or more after the effective date of the Conversion Plan, the initial regulated rent shall be as agreed upon by the parties and reserved in a vacancy lease.

(b) Where deconversion occurs within four years after the effective date of the Conversion Plan, the initial regulated rent shall be the most recent legal regulated rent for the housing accommodation increased by all lawful adjustments that would have been permitted had the housing accommodation been continuously subject to the RSL and this Code.

(c)(1) Where the rent, as agreed upon by the parties and paid by the tenant is $2,000 or more per month, pursuant to subdivision (r) of this section, such accommodation and the rent therefor shall not revert to regulation under this Code.

(2) Initial regulated rents established pursuant to clause (a) of this subparagraph (i) shall not be subject to challenge under section 2526.1(a)(2)(ii) of this Title.

(d)(1) Within 30 days after deconversion, the new owner taking title upon deconversion shall offer a vacancy lease, at an initial regulated rent established pursuant to this subparagraph (i), to the holder of shares formerly allocated to the housing accommodation in the case of cooperative ownership, or the former unit owner in the case of condominium ownership. Such shareholder or former unit owner shall have 30 days to accept such offer by entering into the vacancy lease. Failure to enter into such lease shall be deemed to constitute a surrender of all rights to the housing accommodation.

(2) This clause (d) shall not apply where deconversion was caused, in whole or in part, by a violation of any material term of the proprietary lease by the shareholder or former unit owner.

(3) No individual former owner or proprietary lessee shall be entitled to occupy more than one housing accommodation.

(ii) Housing accommodations occupied at the time of deconversion and not subject to regulation under this Code at such time.

(a) Where the housing accommodation is occupied by a holder of shares formerly allocated to it in the case of cooperative ownership, or by the former owner of such unit in the case of condominium ownership, such shareholder or former unit owner shall be offered a new vacancy lease, subject to regulation under this Code, by the new owner taking title upon deconversion, which lease shall be subject to all of the terms and conditions set forth in subparagraph (i) of this paragraph (1) pertaining to the establishment of initial regulated rents, lease offer, and deregulation, including subclause (2) of clause (d).

(b) Where the housing accommodation is occupied by a current renter pursuant to a sublease with the holder of shares formerly allocated to it in the case of cooperative ownership, or to the former owner of such unit in the case of condominium ownership, the new owner shall offer a vacancy lease to such holder of shares or former unit owner pursuant to all of the terms and conditions set forth in subparagraph (i) of this paragraph (1).

(c) All shareholders or former unit owners described in this subparagraph (ii) shall be offered a vacancy lease within 30 days after the deconversion, and shall have 30 days to accept such offer. However, in the event such shareholder or former unit owner does not enter into the vacancy lease, he or she shall be deemed to have surrendered all rights to the housing accommodation effective 120 days after the deconversion.

(iii) Housing accommodations occupied pursuant to regulation under this Code or the City Rent and Eviction Regulations by non-purchasing tenants immediately prior to deconversion.

The regulated rents for such housing accommodations shall not be affected by the deconversion, and such accommodations shall remain fully subject to all provisions of this Code or the City Rent and Eviction Regulations, whichever is applicable.

(iv)(a) Where it determines that the owner taking title at deconversion caused, in whole or in part, the deconversion to occur, the initial legal regulated rent shall be established by the DHCR pursuant to sections 2522.6 and 2522.7 of this Title. In such cases, if the rent so established and paid is $2,000 or more per month, subdivision (r) of this section shall not apply.

(b) Upon deconversion, housing accommodations which were last subject to regulation pursuant to the City Rent and Eviction Regulations shall become subject to regulation under this Code pursuant to this paragraph (1). In such cases, the initial legal regulated rent shall be established by the DHCR pursuant to sections 2522.6 and 2522.7 of this Title.

(2) Housing accommodations that were subject to regulation under this Code or the City Rent and Eviction Regulations immediately prior to conversion to cooperative or condominium ownership by virtue of the receipt of tax benefits pursuant to applicable law shall revert to regulation under this Code pursuant to paragraph (1) of this subdivision only for such period of time as is required by such applicable law;

Section 13

Subdivision (r) of section 2520.11 of this Part is renumbered subdivision (t), and new subdivisions (r) and (s) are adopted to read as follows:

(r) housing accommodations which:

(1) became vacant on or after July 7, 1993 but before April 1, 1994 where, at any time between July 7, 1993 and October 1, 1993, inclusive, the legal regulated rent was two thousand dollars or more per month; or

(2) became vacant on or after April 1, 1994 but before April 1, 1997, with a legal regulated rent of two thousand dollars or more per month; or

(3) became vacant on or after April 1, 1997 but before June 19, 1997, where the legal regulated rent at the time the tenant vacated was two thousand dollars or more per month; or

(4) became or become vacant on or after June 19, 1997, with a legal regulated rent of two thousand dollars or more per month;

(5) exemption pursuant to this subdivision shall not apply to housing accommodations which became or become subject to the RSL and this Code:

(i) solely by virtue of the receipt of tax benefits pursuant to section 421-a of the Real Property Tax Law, except as otherwise provided in subparagraph (i) of paragraph (f) of subdivision two of such section 421-a, section 11-243 (formerly J51-2.5) or section 11-244 (formerly J51-5) of the Administrative Code of the City of New York, as amended; or

(ii) solely by virtue of article 7-C of the MDL;

(6) exemption pursuant to this subdivision shall not apply to or become effective with respect to housing accommodations for which the Commissioner determines or finds that the owner or any person acting on his or her behalf, with intent to cause the tenant to vacate, engaged in any course of conduct (including, but not limited to, interruption or discontinuance of required services) which interfered with or disturbed or was intended to interfere with or disturb the comfort, repose, peace or quiet of the tenant in his or her use or occupancy of the housing accommodations. In connection with such course of conduct, any other general enforcement provision of the RSL and this Code shall also apply;

(7) during the period of effectiveness of an order issued pursuant to section 2523.4 of this Title for failure to maintain required services, which lowers the legal regulated rent below two thousand dollars per month during the time period specified in this subdivision, a vacancy shall not qualify the housing accommodation for exemption under this subdivision;

(8)(i) where an owner installs new equipment or makes improvements to the individual housing accommodation qualifying for a rent increase pursuant to paragraph (1) of subdivision (a) of section 2522.4 of this Title, while such housing accommodation is vacant, and where the legal regulated rent is raised on the basis of such rent increase, or as a result of any rent increase permitted upon vacancy or succession as provided in section 2522.8 of this Title, or by a combination of rent increases, as applicable, to a level of two thousand dollars per month or more, whether or not the next tenant in occupancy actually is charged or pays two thousand dollars per month or more for rental of the housing accommodation, the housing accommodation will qualify for exemption under this subdivision;

(ii) subparagraph (i) of this paragraph (8) to the contrary notwithstanding, where the housing accommodation became vacant after March 31, 1997, upon the next re-renting of the housing accommodation between April 1, 1997 and June 18, 1997, where the legal regulated rent at the time the tenant vacated was less than two thousand dollars per month, rent increases resulting from new equipment or improvements made during that vacancy will not result in exemption under this subdivision;

(9) where, pursuant to section 2521.2 of this Title, a legal regulated rent is established by record within four years before a rent lower than such legal regulated rent is charged and paid by the tenant, and where, pursuant to such section, upon the vacancy of such tenant, a legal regulated rent previously established by record within four years prior thereto, as lawfully adjusted pursuant to the RSL or this Code, may be charged, and where such previously established legal regulated rent, as so adjusted, is two thousand dollars or more per month, such vacancy shall qualify the housing accommodation for exemption under this subdivision;

(10) where an owner substantially alters the outer dimensions of a vacant housing accommodation, which qualifies for a first rent of $2,000 or more per month, exemption pursuant to this subdivision shall apply.

(s) Upon the issuance of an order by the DHCR pursuant to the procedures set forth in Part 2531 of this Title, including orders resulting from default, housing accommodations which:

(1) have a legal regulated rent of two thousand dollars or more per month as of October 1, 1993, or as of any date on or after April 1, 1994, and which are occupied by persons who had a total annual income in excess of two hundred fifty thousand dollars per annum for each of the two preceding calendar years, where the first of such two preceding calendar years is 1992 through 1995 inclusive, and in excess of one hundred seventy-five thousand dollars, where the first of such two preceding calendar years is 1996 or later, with total annual income being defined in and subject to the limitations and process set forth in Part 2531 of this Title;

(2) exemption pursuant to this subdivision shall not apply to housing accommodations which became or become subject to the RSL and this Code:

(i) solely by virtue of the receipt of tax benefits pursuant to section 421-a of the Real Property Tax Law, except as otherwise provided in subparagraph (i) of paragraph (f) of subdivision two of such section 421-a, section 11-243 (formerly J51-2.5) or section 11-244 (formerly J51-5) of the Administrative Code of the City of New York, as amended; or

(ii) solely by virtue of article 7-C of the MDL;

(3) in determining whether the legal regulated rent for a housing accommodation is two thousand dollars per month or more, the standards set forth in subdivision (r) shall be applicable; to be eligible for exemption under this subdivision, the legal regulated rent must continuously be two thousand dollars or more per month from the owner's service of the income certification form provided for in section 2531.2 of this Title upon the tenant to the issuance of an order deregulating the housing accommodation.

Section 14

Section 2520.13 of this Part is amended to read as follows:

Section 2520.13 Waiver of benefit void.

An agreement by the tenant to waive the benefit of any provision of the RSL or this Code is void; provided, however, that based upon a negotiated settlement between the parties and with the approval of the DHCR, or a court of competent jurisdiction, or where a tenant is represented by counsel, a tenant may withdraw, with prejudice, any complaint pending before the DHCR. Such settlement shall be binding upon subsequent tenants. However, where the settlement encompasses surrender of occupancy by the tenant or the tenant is no longer in possession of the housing accommodation as of the date of the settlement, such settlement shall not be binding upon any subsequent tenant, except to the extent that the complaint being settled is subject to the time limitations set forth in the RSL and this Code.

Section 1

The Title of Part 2521 is amended to read as follows:

LEGAL [REGISTERED AND] REGULATED RENTS

Section 2

Subdivision(a) of section 2521.1 of this Part is amended to read as follows:

Section 2521.1 Initial legal [registered] regulated rents for housing accommodations.

(a)(1) For housing accommodations which on March 31, 1984 were subject to the City Rent Law, and became vacant after that date, and which are no longer subject to the City Rent Law, and are rented thereafter subject to the RSL, the initial legal [registered] regulated rent shall be the rent agreed to by the owner and the tenant and reserved in a lease or provided for in a rental agreement subject to the provisions of this Code, [provided that such rent is registered with the DHCR pursuant to Part 2528 of this Title,] and subject to a tenant's right to a Fair Market Rent Appeal to adjust such rent pursuant to Section 2522.3 of this Title.

(2) For housing accommodations which on March 31, 1984 were subject to the penalties provided in former section YY51-4.0 of the Administrative Code of the City of New York, and which became vacant thereafter, the initial legal [registered] regulated rent for the first rent stabilized tenant shall be the rent established by the DHCR for the prior tenant, increased by the guidelines rate of rent adjustments applicable to the new lease plus such other rent increases as are authorized pursuant to section 2522.4 of this Title, and shall not be subject to a Fair Market Rent Appeal pursuant to section 2522.3 of this Title.

Section 3

Subdivisions (b) and (c) of section 2521.l of this Part are repealed.

Section 4

Subdivision (d) of section 2521.1 of this Part is renumbered subdivision (b), and amended to read as follows:

[(d)](b) (1) [Notwithstanding the provisions of subdivision (c) of this section, the] The initial legal [registered] regulated rent for a housing accommodation for which an overcharge complaint or a Fair Market Rent Appeal was filed by a tenant prior to April 1, 1984, and not finally determined prior thereto, shall be the April 1, 1984 rent as subsequently determined by the DHCR. Such determination will be based upon the law or code provision in effect on March 31, 1984.

(2) Upon determination of the initial legal [registered] regulated rent in paragraph (1) of this subdivision, legal regulated rents subsequent to April 1, 1984 shall be determined in accordance with section [2521.2(a)] 2520.6(e) of this [Part] Title.

Section 5

Subdivision (e) of section 2521.1 of this Part is renumbered subdivision(c), and amended to read as follows:

[(e)] (c) The initial legal [registered] regulated rent for a housing accommodation first made subject to the RSL and this Code pursuant to article 7-C of the MDL shall be the rent established by the Loft Board under section 286(4) of the MDL applicable to a lease offered pursuant to MDL section 286(3). Such rent shall not be subject to the proceedings described in section 2522.3 of this Title. Notwithstanding that the rent charged and paid during the first lease term may have been less than such initial legal [registered] regulated rent, the owner may request that the next lease rental be the initial legal [registered] regulated rent plus the allowable increase established by the Rent Guidelines Board, and such other rent increases as are authorized pursuant to section 2522.4 of this Title.

Section 6

Subdivision (f) of section 2521.1 of this Part is renumbered subdivision (d), and amended to read as follows:

[(f)](d) Notwithstanding the provisions of any outstanding lease or other rental agreement, the initial legal [registered] regulated rent for a housing accommodation in a multiple dwelling for which a loan is made under the PHFL shall be the initial rent established pursuant to such law. Such rent, whether or not the housing accommodation was previously subject to the RSL, shall not be subject to the proceeding described in section 2522.3 of this Title. Such rent for housing accommodations occupied prior to the granting of the loan made pursuant to the PHFL shall take effect on the date specified in the order establishing the rent. Notwithstanding any other provision of the RSL or this Code, the owner of such housing accommodation shall offer any tenant in occupancy on such effective date or upon initial occupancy a one- or two-year lease at the tenant's option at such rent, which offer shall be made as soon as practicable after such rent is established, whether or not the rent has taken or is then permitted to take effect; and refusal of such tenant to sign such lease, at such rent, and otherwise upon the same terms and conditions as the expiring lease, if any, shall constitute grounds for an action or proceeding to evict and recover possession of the housing accommodation; provided, however, that following the tenant's receipt of the offer of such lease at such rent as lawfully established, a tenant in occupancy on such date shall be allowed 30 days to sign such lease and, if during such 30-day period, such tenant gives the owner written notice of an intention to terminate such tenancy and pays the rent established pursuant to law for such month and for any extended period, the tenant shall not be required to surrender the housing accommodation until 60 days after receipt of such offer. Notwithstanding that the rent charged and paid during the first lease term may have been less than such initial legal [registered] regulated rent, the owner may request that the next lease rental be the initial legal [registered] regulated rent plus the allowable increase established by the Rent Guidelines Board.

Section 7

Subdivision (g) of section 2521.1 of this Part is renumbered subdivision (e), and amended to read as follows:

[(g)](e) Notwithstanding any other provision of this Code, the initial legal [registered] regulated rent for a housing accommodation first made subject to the RSL and this Code pursuant to article XIV of the PHFL or section 2429 of article 8 of the Public Authorities Law shall be the rent established pursuant to law which reflects the improvements or rehabilitation and shall be subject to subsequent adjustment by the DHCR. Such rent shall not be subject to the proceedings described in section 2522.3 of this Title. Notwithstanding any other provision of the RSL or this Code: the owner of such housing accommodation shall offer a tenant in occupancy who first became subject to the RSL and this Code on the effective date of such rent a one or two-year lease at the tenant's option at such rent, which offer shall be made as soon as practicable after such rent is effective; and refusal of such tenant to sign such lease at such rent, and otherwise upon the same terms and conditions as the expiring lease, if any, shall constitute grounds for an action or proceeding to evict and recover possession of the housing accommodation; provided, however, that following tenant's receipt of the offer of such lease at such rent, a tenant in occupancy on such effective date shall be allowed 30 days to sign such lease and, if during such 30-day period, such tenant gives the owner written notice of an intention to terminate such tenancy and pay the rent established pursuant to law while in occupancy, the tenant shall not be required to surrender the housing accommodation until 60 days after receipt of such offer. Notwithstanding that the rent charged and paid during the first lease term may have been less than such initial legal [registered] regulated rent, the owner may request that the next lease rental be the initial legal [registered] regulated rent plus the allowable increase established by the Rent Guidelines Board.

Section 8

Subdivision (h) of section 2521.1 of this Part is renumbered subdivision (f), and amended to read as follows:

[(h)](f) If a housing accommodation is rehabilitated pursuant to either article XIV of the PHFL or section 2429 of article 8 of the Public Authorities Law, and article XV of the PHFL, the provisions in subdivision [(f)] (d) shall apply, rather than the provisions of subdivision [(g)] (e), if HPD elects to establish rents for the housing accommodation pursuant to article XV of the PHFL.

Section 9

Subdivision (i) of section 2521.1 of this Part is renumbered subdivision (g), and amended to read as follows:

[(i)](g) The initial legal [registered] regulated rent for a housing accommodation constructed pursuant to section 421-a of the Real Property Tax Law shall be the initial adjusted monthly rent charged and paid but not higher than the rent approved by HPD pursuant to such section for the housing accommodation or the lawful rent charged and paid on April 1, 1984, whichever is later.

Section 10

Subdivision (j) of section 2521.1 of this Part is renumbered subdivision (h), and amended to read as follows:

[(j)](h) The initial legal [registered] regulated rent for housing accommodations subject this Code solely as a condition of receiving or continuing to receive benefits pursuant to section 11-243 (formerly J51-2.5) or 11-244 (formerly J51-5.0) of the Administrative Code, as amended, shall be the rent charged the initial rent stabilized tenant or the lawful rent charged and paid on April 1, 1984, whichever is later, and shall not be subject to a Fair Market Rent Appeal pursuant to section 2522.3 of this Title. However, as to any housing accommodation which previously received tax benefits pursuant to section 11-243 (formerly J51-2.5) or 11-244 (formerly J51-5.0), was not covered by the provisions of the RSL on June 18, 1985, and was made subject to such law by the provisions of chapters 288 and 289 of the Laws of New York for the year 1985 (as amended), the initial legal [registered] regulated rent shall be the rent charged and paid on May 30, 1985, or the maximum rent which could have been charged if the housing accommodation had been continuously subject to the RSL for the entire tenancy of the tenant in occupancy on May 30, 1985, whichever is greater.

Section 11

Subdivision (k) of section 2521.1 of this Part is renumbered subdivision (i), and amended to read as follows:

[(k)](i) Notwithstanding the provisions of the RSL or any other provision of this Code, the initial legal [registered] regulated rent upon completion of the rehabilitation of a Class B multiple dwelling, Class A multiple dwelling used for single-room occupancy purposes, lodging house or a substantially vacant building intended to be used after rehabilitation for single-room occupancy purposes for which a loan is made for such rehabilitation on or after September 1, 1985, under article VIII or VIII-A of the PHFL, shall be the initial rent established by HPD pursuant to such law. Such rent, whether or not the housing accommodation was previously subject to the RSL, shall not be subject to the proceeding described in section 2522.3 of this Title. Such rent shall take effect on the date specified in the order establishing the rent. Notwithstanding the provisions of the RSL or any other provision of this Code, the owner of such housing accommodation shall offer any tenant in occupancy on such effective date a one- or two-year lease, at the tenant's option, at such rent, which offer shall be made as soon as practicable after such rent is established. Refusal of such tenant to sign such lease at such rent, and otherwise upon the same terms and conditions as the expiring lease, if any, shall constitute grounds for an action or proceeding to evict and recover possession of the housing accommodation; provided, however, that following the tenant's receipt of the offer of such lease at such rent as lawfully established, a tenant in occupancy on such date shall be allowed 30 days to sign such lease and, if during such 30-day period, such tenant gives the owner written notice of an intention to terminate such tenancy and pay the rent established pursuant to law for such month and for any extended period, the tenant shall not be required to surrender the housing accommodation until 60 days after receipt of such lease offer. Notwithstanding that the rent charged and paid during the first lease term may have been less than such initial legal [registered] regulated rent, the owner may request that the next lease rental be the initial legal [registered] regulated rent plus the allowable increase established by the Rent Guidelines Board, and such other rent increases as are authorized pursuant to section 2522.4 of this Title.

Section 12

Subdivision (l) of section 2521.1 of this Part is renumbered subdivision (j), and amended to read as follows:

[(l)](j) For housing accommodations whose rentals were previously regulated under the PHFL, or any other State or Federal law, other than the RSL or the City Rent Law, upon the termination of such regulation, the initial legal [registered] regulated rent shall be the rent charged to and paid by the tenant in occupancy on the date such regulation ends. For housing accommodations which are vacant on the date the building first [became] becomes subject to the RSL and this Code, such rent shall be the most recent rent [charged and paid by the most recent tenant, in addition to rental subsidies, if any] approved by the supervising agency, which shall be subject to [vacancy guidelines] all increases permitted by law and this Code, and which shall not be subject to a Fair Market Rent Appeal pursuant to section 2522.3 of this Title.

Section 13

Subdivision (m) of section 2521.1 of this Part is renumbered subdivision (k), and amended to read as follows:

[m](k) Notwithstanding any other provision of this Code, except as provided in paragraph (2) of this subdivision, governmental agencies or public benefit corporations may enter into an agreement with the DHCR, which shall be incorporated into an order of the DHCR, setting forth the conditions under which:

(1) projects receiving assistance or financing from such agencies may register higher and lower initial legal rents for units subject to occupancy and rent restrictions by such agencies, which rents may then be adjusted pursuant to the RSL and this Code, and shall not be subject to the proceedings described in section 2522.3 of this Title; or

(2) projects whose rentals were previously regulated under the PHFL or any other State or Federal law, other than the RSL or the City Rent Law, upon the date when such regulation ends, may register higher and lower initial legal rents for units which have been subject to occupancy and rent restrictions pursuant to such laws, which rents may then be adjusted pursuant to the RSL and this Code, and shall not be subject to the proceedings described in section 2522.3 of this Title. Where the DHCR was the agency regulating rentals pursuant to the PHFL, such terms and conditions shall be incorporated into an order of the DHCR.

Such agreement or order shall also set forth the conditions under which the higher and lower legal regulated rents may be charged, with due consideration of equities as set forth in section 2522.7 of this Title. No further agreements shall be entered into pursuant to this subdivision on and after January 1, 2000.

Section 14

The title of section 2521.2 of this Part is amended to read as follows:

Section 2521.2 [Legal regulated rents for housing accommodations] Preferential Rents.

Section 15

Subdivision (a) of section 2521.2 of this Part is repealed.

Section 16

Subdivision (b) of section 2521.2 of this Part is amended to read as follows:

[(b)] Where the legal regulated rent is established and documented in a manner prescribed by the DHCR, and a rent lower than [the legal regulated] such rent is charged and paid by the tenant, [upon] such lower rent shall be a preferential rent, which shall be subject to all adjustments provided by law and this Code. Upon vacancy of [such] the tenant who pays a preferential rent, the legal regulated rent shall be the legal regulated rent previously established by record within four years prior thereto, plus [the most recent applicable] all intervening guidelines increases, plus such other rent increases as are authorized [pursuant to section 2522.4 of this Title, may be charged a new tenant] by law and this Code.

Section 1

Section 2522.2 of this Part is amended to read as follows:

Section 2522.2 Effective date of adjustment of legal regulated rents.

The legal regulated rent shall be adjusted effective the first rent payment date occurring 30 days after the filing of the application, unless otherwise set forth in the order, [or as set forth in a Notice of Eligibility pursuant to section 2522.4(a)(3)(ii) of this Part,] or on the effective date of a lease or other rental agreement providing for the Rent Guidelines Board annual rate of adjustments, or upon vacancy or succession as provided in section 2522.8 of this Part. No rent adjustment may take place during a lease term unless a clause in the lease authorizes such increase, or as otherwise provided by law and this Code.

Section 2

Subdivision (a) of section 2522.3 of this Part is amended to read as follows:

(a) Except as provided in section 2521.1(a)(2) of this Title, an appeal of the initial [legal registered] rent on the ground that it exceeds the fair market rent for the housing accommodation may be filed with the DHCR by the tenant of a housing accommodation which was subject to the City Rent Law on December 31, 1973. [If the housing accommodation was registered in accordance with Part 2528 of this Title, this] This right is limited to the first tenant taking occupancy on or after April 1, 1984, except where such tenant had vacated the housing accommodation prior to the service by the owner of the Notice of Initial Legal [Registered] Regulated Rent as required by section 2523.1 of this Title. In such event, any subsequent tenant in occupancy shall also have a right to file a Fair Market Rent Appeal until the owner mails the required notice and 90 days shall have elapsed without the filing of an appeal by a tenant continuing in occupancy during said 90-day period. Once a Fair Market Rent Appeal is filed, no subsequent tenant may file such appeal. Notwithstanding the above, where the first tenant taking occupancy after December 31, 1973, of a housing accommodation previously subject to the City Rent Law, was served with the notice required by section 26 of the former code of the Rent Stabilization Association of New York City, Inc., the time within which such tenant may file a Fair Market Rent Appeal is limited to 90 days after such notice was mailed to the tenant by the owner by certified mail. However, no Fair Market Rent Appeal may be filed after four years from the date the housing accommodation was no longer subject to the City Rent Law.

Section 3

Subdivision (b) of section 2522.3 of this Part is amended to read as follows:

(b) The tenant [need only] must allege in such appeal:

(1) that the initial [legal registered] rent is in excess of the fair market rent; and

(2) [such] facts which, to the best of his or her information and belief, support such allegation.

Section 4

Subdivision (c) of section 2522.3 of this Part is repealed, and a new subdivision (c) is adopted to read as follows:

(c) Such appeal shall be dismissed where:

(1) the appeal is filed more than 90 days after the certified mailing to the tenant of the Initial Apartment Registration, together with the Notice pursuant to section 2523.1 of this Title; or

(2) the appeal is filed more than four years after the vacancy which caused the housing accommodation to no longer be subject to the City Rent Law.

Section 5

Subdivision (d) of section 2522.3 of this Part is amended to read as follows:

(d)(1) The order shall direct the affected owner to make the refund of any excess rent to the tenant in cash, check or money order, and to the extent the present owner is liable for all or any part of the refund, such present owner may credit such refund against future rents over a period not in excess of six months. In the absence of collusion between the present owner and any prior owner, where no records sufficient to establish the Fair Market Rent were provided at a judicial sale, or such other sale effected in connection with, or to resolve, in whole or in part, a bankruptcy proceeding, mortgage foreclosure action or other judicial proceeding, an owner who purchases upon or subsequent to such sale shall not be liable for excess rent collected by any owner prior to such sale. An owner who did not purchase at such sale, but who purchased subsequent to such sale shall also not be liable for excess rent collected by any prior owner subsequent to such sale to the extent that such excess rent is the result of excess rent collected prior to such sale. If the refund exceeds the total rent due for six months, the tenant at his or her option may continue to abate his or her rent until the refund is fully credited, or request the present owner to refund any balance outstanding at the end of such six-month period.

(2) Court-appointed Receivers. A Receiver who is appointed by a court of competent jurisdiction to receive rent for the use or occupation of a housing accommodation shall not, in the absence of collusion or any relationship between such Receiver and any owner or other Receiver, be liable for excess rent collected by any owner or other Receiver, where records sufficient to establish the Fair Market Rent have not been made available to such Receiver.

Section 6

Subdivision (e) of section 2522.3 of this Part is amended to read as follows:

(e) In determining Fair Market Rent Appeals filed pursuant to paragraph (1) of subdivision (a) of this section, consideration shall be given to the applicable guidelines promulgated for such purposes by the Rent Guidelines Board and to rents generally prevailing for [substantially similar] comparable housing accommodations in buildings located in the same area as the housing accommodation involved. In addition, consideration of the rental history of the subject housing accommodation for the period prior to the four-year period preceding the filing of the Fair Market Rent Appeal is precluded. The rents for these comparable housing accommodations may be considered where such rents are:

(1) [legal regulated] unchallenged rents[, for which the time to file a Fair Market Rent Appeal has expired and no Fair Market Rent Appeal is then pending, or the Fair Market Rent Appeal has been finally determined, charged pursuant to a lease commencing within a four-year period prior to, or a one-year period subsequent to, the commencement date of the initial lease for the housing accommodation involved; and] in effect for housing accommodations subject to this Code on the date the tenant filing the appeal took occupancy; or

(2) at the owner's option, market rents in effect for other comparable housing accommodations on the date [of] the [initial lease for the housing accommodation involved] tenant filing the appeal took occupancy, as submitted by the owner.

Section 7

Subdivision (f) of section 2522.3 of this Part is repealed.

Section 8

The opening paragraph of paragraph (2) of subdivision (a) of section 2522.4 of this Part is amended to read as follows:

(2) An owner may file an application to increase the legal regulated rents of the building or building complex on forms prescribed by the DHCR, [which the DHCR shall serve upon all affected tenants,] on one or more of the following grounds:

Section 9

Clause (d) of subparagraph (i) of paragraph (2) of subdivision (a) of section 2522.4 of this Part is repealed, and a new clause (d) is adopted to read as follows:

(d) the item being replaced meets the requirements set forth on the following useful life schedule, except with DHCR approval of a waiver, as set forth in clause (e) of this subparagraph.

For major capital improvements not listed above, the owner must submit with the application evidence that the useful life of the item or equipment being replaced has expired.

Section 10

A new clause (e) of subparagraph (i) of paragraph (2) of subdivision (a) of section 2522.4 of this Part is adopted to read as follows:

(e)(1) An owner who wishes to request a waiver of the useful life requirement set forth in clause (d) of this subparagraph (i) must apply to the DHCR for such waiver prior to the commencement of the work for which he or she will be seeking a major capital improvement rental increase. Notwithstanding this requirement, where the waiver requested is for an item being replaced because of an emergency, which causes the building or any part thereof to be dangerous to human life and safety or detrimental to health, an owner may apply to the DHCR for such waiver at the time he or she submits the major capital improvement rent increase application.

(2) If waiver is denied, the owner will not be eligible for an MCI increase. If it is granted, the useful life requirement will not be a factor in the determination of eligibility for the major capital improvement rent increase. However, approval of the waiver does not assure that the application will be granted, as all other requirements set forth in this paragraph must be met.

(3) An owner may apply for, and the DHCR may grant, a waiver of the useful life requirements set forth in the Useful Life Schedule, if the owner satisfactorily demonstrates the existence of one or more of the following circumstances:

(i) The item or equipment cannot be repaired and must be replaced during its useful life because of a fire, vandalism or other emergency, or "act of God" resulting in an emergency;

(ii) The item or equipment needs to be replaced because such item or equipment is beyond repair, or spare parts are no longer available, or required repairs would cost more than 75 percent of the cost of the total replacement of the item or equipment. Certification by a duly licensed engineer or architect, where there is no common ownership or other financial interest with the owner, shall be considered substantial proof of such condition(s). The owner may also be required to submit proof that the item or equipment was properly maintained. Such proof may include receipts for repairs and parts or maintenance logs;

(iii)(A) An appropriate New York State or local governmental agency has determined that the item or equipment needs to be replaced as part of a government housing program;

(B) For the owner to qualify for a New York State or local government long-term loan or insured loan, the governmental lender or insurer requires the remaining useful life of the building or building complex, as well as the component parts of such building or building complex, to be as great as or greater than the term of the loan agreement.

(iv) The replacement of an item or equipment which has proven inadequate, through no fault of the owner, is necessary, provided that there has been no major capital improvement rent increase for that item or equipment being replaced.

(4) In the event that the DHCR determines that an installation qualifies for a waiver of the useful life requirements, the DHCR may:

(i) where no previous increase was granted within the useful life of the item or equipment being replaced and the cost of repair would equal or exceed the cost of replacement, approve 100 percent of the substantiated cost of the item or equipment, including installation;

(ii) where no previous increase was granted within the useful life of the item or equipment being replaced and the cost of repair is more than 75 percent of the cost of replacement, grant a prorated increase based upon the remaining useful life;

(iii) where it is determined that an item is eligible to be replaced during its useful life, grant an increase based upon the difference between the substantiated cost of the item or equipment, including installation, and (a) the amount reimbursed from other sources, such as insurance proceeds or any other form of commercial guarantee, and (b) the amount of any increase previously granted for the same item or equipment either as a major capital improvement, or pursuant to other governmental programs, if such item or equipment has not exhausted at least 75 percent of its useful life at the time of the installation;

(iv) where it is determined that an item is eligible to be replaced even though it has not exhausted 75 percent of its useful life and that it was installed as part of a substantial rehabilitation or the new construction of a building for which the owner set initial building-wide rents, the DHCR may reduce the increase granted for a major capital improvement by a proportion of the remaining useful life of such item or equipment.

(5) Notwithstanding the provisions of subclause (4) of this clause, where an owner had substantially commenced work on the major capital improvement installation before February 1, 1991, based on prior DHCR decisions and policies, and where adherence to useful life requirements or to the conditions of the waiver would create an undue hardship, the owner's application will be determined in accordance with those prior decisions and policies.

Section 11

Clause (a) of subparagraph (ii) of paragraph (2) of subdivision (a) of section 2522.4 of this Part is amended to read as follows:

(a) improve, restore or preserve the quality of the structure and the grounds; and

Section 12

Paragraph (3) of subdivision (a) of section 2522.4 of this Part is repealed, and a new paragraph (3) is adopted to read as follows:

(3) Improvements or installations for which the DHCR may grant applications for rent increases based upon major capital improvements pursuant to paragraph (2) of this subdivision are described on the following Schedule. Other improvements or installations that are not included may also qualify, where all requirements of paragraph (2) of this subdivision have been met.

SCHEDULE OF MAJOR CAPITAL IMPROVEMENTS

1. AIR CONDITIONER:
- new central system; or individual units set in sleeves in the exterior wall of every housing accommodation; or, air conditioning circuits and outlets in each living room and/or bedroom (SEE REWIRING).

2. ALUMINUM SIDING:
- installed in a uniform manner on all exposed sides of the building (SEE RESURFACING).

3. BATHROOM MODERNIZATION:
- complete renovation including new sinks, toilets, bathtubs, and/or showers and all required trims in every housing accommodation; or any individual component or fixture if done building-wide.

4. BOILER AND/OR BURNER:
- new unit(s) including electrical work and additional components needed for the installation.

5. BOILER ROOM:
- new room where none existed before; or enlargement of existing one to accommodate new boiler.

6. CATWALK:
- complete replacement.

7. CHIMNEY:
- complete replacement, or new one where none existed before, including additional components needed for the installation.

8. COURTYARD, DRIVEWAYS AND WALKWAYS:
- resurfacing of entire original area within the property lines of the premises.

9. DOORS:
- new lobby front entrance and/or vestibule doors; or entrance to every housing accommodation, or fireproof doors for public hallways, basement, boiler room and roof bulkhead.

10. ELEVATOR UPGRADING:
- including new controllers and selectors; or new electronic dispatch overlay system; or new elevator where none existed before, including additional components needed for the installation.

11. FIRE ESCAPES:
- complete new replacement including new landings.

12. GAS HEATING UNITS:
- new individual units with connecting pipes to every housing accommodation.

13. HOT WATER HEATER:
- new unit for central heating system.

14. INCINERATOR UPGRADING:
- including a new scrubber.

15. INTERCOM SYSTEM:
new replacement; or one where none existed before, with automatic door locks and pushbutton speakerbox and/or telephone communication, including security locks on all entrances to the building.

16. KITCHEN MODERNIZATION:
- complete renovation including new sinks, counter tops and cabinets in every housing accommodation; or any individual component or fixture if done building-wide.

17. MAILBOXES:
- new replacements and relocated from outer vestibule to an area behind locked doors to increase security.

18. PARAPET:
- complete replacement.

19. POINTING AND WATERPROOFING:
- as necessary on exposed sides of the building.

20. REPIPING:
- new hot and/or cold water risers, returns, and branches to fixtures in every housing accommodation, including shower bodies, and/or new hot and/or new cold water overhead mains, with all necessary valves in basement.

21. RESURFACING OF EXTERIOR WALLS:
- consisting of brick or masonry facing on entire area of all exposed sides of the building.

22. REWIRING:
- new copper risers and feeders extending from property box in basement to every housing accommodation; must be of sufficient capacity (220 volts) to accommodate the installation of air conditioner circuits in living room and/or bedroom.

23. ROOF:
- complete replacement or roof cap on existing roof installed after thorough scraping and leveling as necessary.

24. SOLAR HEATING SYSTEM:
- new central system, including additional components needed for the system.

25. STRUCTURAL STEEL:
- complete new replacement of all beams including footing and foundation.

26. TELEVISION SYSTEM:
- new security monitoring system including additional components needed for the system.

27. WASTE COMPACTOR:
- new installation(s) serving entire building.

28. WASTE COMPACTOR ROOM:
- new room where none existed before.

29. WATER SPRINKLER SYSTEM (FOR FIRE CONTROL PURPOSES):
- new installation(s).

30. WATER TANK:
- new installation(s).

31. WINDOWS:
- new framed windows.

Section 13

Paragraph (4) of subdivision (a) of section 2522.4 of this Part is amended to read as follows:

(4) The increase in the monthly stabilization rent for the affected accommodations when authorized pursuant to paragraph (1) of this subdivision (a) shall be 1/40th of the total cost, including installation but excluding finance charges; and any increase pursuant to paragraph[s] (2) [and (3)] shall be [1/60th] 1/84th of the total cost, including installation but excluding finance charges as allocated in accordance with paragraph (12) of this subdivision (a). For increases pursuant to subparagraphs (2)(iii) and (iv) of this subdivision (a), in the discretion of the DHCR, an appropriate charge may be imposed in lieu of an amortization charge when an amortization charge is insignificant or inappropriate.

Section 14

Paragraph (7) of subdivision (a) of section 2522.4 of this Part is amended to read as follows:

(7) [Except for applications made pursuant to paragraph (3) of this subdivision, an] An owner may apply for the DHCR's advisory prior opinion pursuant to section 2527.11 of this Title, as to whether the proposed work qualifies for an increase in the legal regulated rent.

Section 15

Paragraph (8) of subdivision (a) of section 2522.4 of this Part is amended to read as follows:

(8) No increase pursuant to paragraph[s] (2) [and (3)] of this subdivision (a) shall be granted by the DHCR, unless an application is filed no later than two years after the completion of the installation or improvement unless the applicant can demonstrate that the application could not be made within two years due to delay, beyond the applicant's control, in obtaining required governmental approvals for which the applicant has applied within such two-year period. No increase pursuant to paragraph[s] (2) [and (3)] of this subdivision (a) shall be granted within the useful life of an improvement or installation for which an increase was previously granted except with DHCR prior approval for required improvements. In addition, an increase pursuant to paragraph[s] (2) [and (3)] shall not be collectible from a tenant to whom there has been issued a currently valid senior citizen rent increase exemption pursuant to section 26-509 of the Administrative Code of the City of New York, to the extent such increase causes the legal regulated rent of the housing accommodation to exceed one third of the aggregate disposable income of all members of the household residing in the housing accommodation. The collection of any increase in the legal regulated rent for any housing accommodation pursuant to paragraph[s] (2) [and (3)] of this subdivision (a) shall not exceed six percent in any year from the effective date of the [Notice of Eligibility or of the] order granting the increase over the rent set forth in the schedule of gross rents with collectibility of any dollar excess above set sum to be spread forward in similar increments and added to the legal regulated rent as established or set in future years. In no event shall more than one six-percent increase in the legal regulated rent pursuant to paragraph[s] (2) [and (3)] of this subdivision (a) be collected in the same year [for the permanent, prospective rent increase, and no more than an additional six-percent increase for the temporary retroactive portion of such rent increase].

Section 16

Paragraph (9) of subdivision (a) of section 2522.4 of this Part is amended to read as follows:

(9) An increase for an improvement made pursuant to paragraph[s] (2) [and (3)] of this subdivision (a) shall not be granted by the DHCR to the extent that, after a plan for the conversion of a building to cooperative or condominium ownership is declared effective, such improvement is paid for out of the cash reserve fund of the cooperative corporation or condominium association. However, where prior to the issuance of an order granting the increase, the funds taken from the reserve fund are returned to it by the sponsor or holder of unsold shares or units or through a special assessment of all shareholders or unit owners, the increase may be based upon the total cost of the improvement. Nothing in this paragraph (9) shall prevent an owner from applying for, and the DHCR from granting, an increase for such improvement to the extent that the cost thereof is otherwise paid for by an owner.

Section 17

Paragraph (10) of subdivision (a) of section 2522.4 of this Part is amended to read as follows:

(10) The DHCR shall not grant an application pursuant to this subdivision (a) for an increase for any improvement made pursuant to paragraph[s] (2) [and (3)] of this subdivision (a) to the extent that the cost of such improvement is paid for by an owner with funds received pursuant to a grant from any governmental agency or entity. A low interest loan or subsidy shall not be considered a grant for the purposes of this paragraph (10). Nothing in this paragraph (10) shall prevent an owner from applying for, and the DHCR from granting, an increase for such improvement to the extent that the cost thereof is otherwise paid for by an owner.

Section 18

Paragraph (12) of subdivision (a) of section 2522.4 of this Part is amended to read as follows:

(12) Rent adjustments pursuant to paragraph[s] (2) [and (3)] of this subdivision (a) and subdivisions (b) and (c) of this section shall be allocated as follows: The DHCR shall determine the dollar amount of the monthly rent adjustment. Such dollar amount shall be divided by the total number of rooms in the building. The amount so derived shall then be added to the rent chargeable to each housing accommodation in accordance with the number of rooms contained in such housing accommodation.

Section 19

Subdivision (a) of section 2522.4 of this Part is amended by adopting a new paragraph (15) to read as follows:

(15) Where during the processing of a rent increase application filed pursuant to paragraph (2) of this subdivision, tenants interpose answers complaining of defective operation of the major capital improvement, the complaint may be resolved in the following manner:

(i) Where municipal "sign-offs" (other than building permits) are required for the approval of the installation, and the tenants' complaints relate to the subject matter of the sign-off, the complaints may be resolved on the basis of the sign-off, and the tenants referred to the approving governmental agency for whatever action such agency may deem appropriate;

(ii) Where municipal sign-offs are not required, or where the alleged defective operation of the major capital improvement does not relate to the subject matter of the sign-off, the complaint may be resolved by the affidavit of an independent licensed architect or engineer that the condition complained of was investigated and found not to have existed, or if found to have existed, was corrected. Such affidavit, which shall be served by the DHCR on the tenants, will raise a rebuttable presumption that the major capital improvement is properly operative. Tenants may rebut this presumption only on the basis of persuasive evidence, for example, a counter affidavit by an independent licensed architect or engineer, or an affirmation by 51 percent of the complaining tenants. Except for good cause shown, failure to rebut the presumption within 30 days will result in the issuance of an order without any further physical inspection of the premises by DHCR.

(iii) General Requirements.

There must be no common ownership, or other financial interest, between such architect or engineer and the owner or tenants. The affidavit shall state that there is no such relationship or other financial interest. The affidavit must also contain a statement that the architect or engineer did not engage in the performance of any work, other than the investigation, relating to the conditions that are the subject of the affidavit. The affidavit submitted must contain the original signature and professional stamp of the architect or engineer, not a copy. DHCR may conduct follow-up inspections randomly to ensure that the affidavits accurately indicate the condition of the premises. Any person or party who submits a false statement shall be subject to all penalties provided by law.

Section 20

Paragraph (4) of subdivision (d) of section 2522.5 of this Part is amended to read as follows:

(4) in the case of a vacancy lease, where an application for a rent adjustment pursuant to section 2522.4(a)(2)[or 3], (b) or (c) of this Part is pending before the DHCR, such lease also recites that such application is pending before the DHCR and the basis for the adjustment, and that the increase which is the subject of such application, if granted, may be effective during the term of the lease.

Section 21

Subdivision (f) of section 2522.5 of this Part is amended to read as follows:

(f) Vacancy prior to expiration of lease term.

[Where] (1) For leases entered into on or before June 15, 1997, where the tenant vacates prior to the expiration of the term of the lease, and the housing accommodation is rented to a new tenant pursuant to a lease commencing during the same guidelines period as the prior lease, the rental provided in the new lease shall: [(1)](i) be in accordance with and at the guidelines rate of rent adjustment applicable to the new lease; and [(2)](ii) shall be computed upon the legal regulated rent charged and paid on the last day of the immediately preceding guidelines year; and [(3)](iii) may include such other rent increases as are authorized pursuant to [section 2522.4 of this Part] the RSL or this Code.

(2) For leases entered into after June 15, 1997, the rental provided in the new lease shall be in accordance with Section 2522.8 of this Part. The length of the occupancy by the tenant vacating prior to the expiration of the lease term shall have no bearing on the availability of lawful rent increases.

Section 22

Subdivision (g) of section 2522.5 of this Part is amended to read as follows:

(g) Same terms and conditions.

(1) The lease provided to the tenant by the owner pursuant to subdivision (b) of this section shall be on the same terms and conditions as the expired lease, except where the owner can demonstrate that the change is necessary in order to comply with a specific requirement of law or regulation applicable to the building or to leases for housing accommodations subject to the RSL, or with the approval of the DHCR. Nothing herein may limit the inclusion of authorized clauses otherwise permitted by this Code or by order of the DHCR not contained in the expiring lease. Notwithstanding the foregoing, the tenant shall have the right to have his or her spouse, whether husband or wife, added to the lease or any renewal thereof as an additional tenant where said spouse resides in the housing accommodation as his or her primary residence.

(2) Where an owner has filed an Owner's Petition for Decontrol (OPD) with the DHCR, as provided for in section 2531.3 of this Title, and the period during which the owner must offer a renewal lease pursuant to subdivision (a) of section 2523.5 of this Title has not expired, and the proceeding for decontrol is pending, the owner shall be permitted to attach a rider to the offered renewal lease, on a form prescribed or a facsimile of such form approved by the DHCR, containing a clause notifying the tenant that the offered renewal lease, if accepted, shall nevertheless no longer be in effect after 60 days from the issuance by the DHCR of an order of decontrol, or, in the event that a petition for administrative review (PAR) is filed against such order of decontrol, after 60 days from the issuance by the DHCR of an order dismissing or denying the PAR.

Section 23

Section 2522.6 of this Part is amended to read as follows:

2522.6 Orders where the legal regulated rent or other facts are in dispute, in doubt, or not known, or where the legal regulated rent must be fixed.

(a) Where the legal regulated rent or any fact necessary to the determination of the legal regulated rent, or the dwelling space, required services or equipment required to be provided with the housing accommodation is in dispute between the owner and the tenant, or is in doubt, or is not known, the DHCR at any time upon written request of either party, or on its own initiative, may issue an order in accordance with the applicable provisions of this Code determining the facts, including the legal regulated rent, the dwelling space, required services, and equipment required to be provided with the housing accommodations.

(b) Such order shall determine such facts or establish the legal regulated rent in accordance with [section 2521.2] the provisions of this [Title] Code. Where such order establishes the legal regulated rent, it shall contain a directive that all rent collected by the owner in excess of the legal regulated rent established under this section for such period as is provided in section 2526.1(a) of this Title, or the date of the commencement of the tenancy, if later, either be refunded to the tenant, or be enforced in the same manner as prescribed in section 2526.1(e) and (f) of this Title. Orders issued pursuant to this section shall be based upon the law and Code provisions in effect on March 31, 1984, if the complaint was filed prior to April 1, 1984. However, in the absence of collusion or any relationship between an owner and any prior owner, where such owner purchases the housing accommodations upon a judicial sale, or such other sale effected in connection with, or to resolve, in whole or in part, a bankruptcy proceeding, mortgage foreclosure action or other judicial proceeding, and no records sufficient to establish the legal regulated rent were made available to such purchaser, such orders shall establish the legal regulated rent [with due consideration of equities pursuant to section 2522.7 of this Part] on the date of the inception of the complaining tenant's tenancy, or the date four years prior to the date of the filing of an overcharge complaint pursuant to section 2526.1 of this Title, whichever is most recent, based on either:

(1) documented rents for comparable housing accommodations, whether or not subject to regulation pursuant to this Code, submitted by the owner, subject to rebuttal by the tenant; or

(2) if the documentation set forth in paragraph (1) of this subdivision is not available or is inappropriate, data compiled by the DHCR, using sampling methods determined by the DHCR, for regulated housing accommodations; or

(3) in the event that the information described in both paragraphs (1) and (2) of this subdivision is not available, the complaining tenant's rent reduced by the most recent guidelines adjustment.

This subdivision shall also apply where the owner purchases the housing accommodations subsequent to such judicial or other sale. Notwithstanding the foregoing, this subdivision shall not be deemed to impose any greater burden upon owners with regard to record keeping than is provided pursuant to RSL section 26-516(g). In addition, where the amount of rent set forth in the rent registration statement filed four years prior to the date the most recent registration statement was required to have been filed pursuant to Part 2528 of this Title is not challenged within four years of its filing, neither such rent nor service of any registration shall be subject to challenge any time thereafter.

Section 24

Section 2522.7 of this Part is amended to read as follows:

Section 2522.7 Consideration of equities.

In issuing any order adjusting or establishing any legal regulated rent, [or in determining any applications by tenants pursuant to section 2523.5(f) of this Title,] or in determining when a higher or lower legal regulated rent shall be charged pursuant to an agreement between the DHCR and governmental agencies or public benefit corporations, the DHCR shall take into consideration all factors bearing upon the equities involved, subject to the general limitation that such adjustment, establishment or determination can be put into effect with due regard for protecting tenants and the public interest against unreasonably high rent increases inconsistent with the purposes of the RSL, for preventing imposition upon the industry of any industry-wide schedule of rents or minimum rents, and for preserving the regulated housing stock.

Section 25

A new section 2522.8 of this Part is adopted to read as follows:

Section 2522.8 Rent adjustments upon vacancy or succession.

(a) The legal regulated rent for any vacancy lease entered into after June 15, 1997 shall be as hereinafter provided in this subdivision. The previous legal regulated rent for such housing accommodation shall be increased by the following: (1) if the vacancy lease is for a term of two years, twenty percent of the previous legal regulated rent; or (2)