The Real Estate Tax Compliance Program

The Real Estate Tax Compliance Program, a joint initiative of the New York State Attorney General (“NYAG”), the Tenant Protection Unit (“TPU”) of the New York State Division of Housing and Community Renewal (“DHCR”) and the City of New York Department of Housing Preservation and Development (“HPD”) addresses the violation of rent stabilization requirements by owners of multifamily residential rental buildings receiving a partial property tax exemption under Section 421-a of the Real Property Tax Law.

Section 421-a requires that rental properties receiving the tax exemption must be registered as rent stabilized.  Properties owned as condominiums or cooperatives are exempt from this rent registration requirement.  NYAG, TPU and HPD have identified a number of buildings whose developers represented that the buildings would be owned as condominiums but failed to consummate a condominium offering (i.e., recording a Declaration of Condominium and transferring title to at least one unit purchaser pursuant to an offering plan filed with the NYAG).  Because such buildings are now being operated as rentals, the owners are required to register all apartments with DHCR as rent stabilized.

The NYAG, TPU and HPD have identified residential rental buildings that are currently receiving tax benefits under Section 421-a, but are not complying with the statute’s rent-stabilization requirements.  The three agencies jointly mailed notices of non-compliance to the owners of these buildings.  The Real Estate Tax  Compliance Program is a non-negotiable, one time opportunity for the identified building owners to immediately remedy their non-compliance in order to avoid potential revocation of tax benefits and/or other enforcement action.  Detailed instructions are provided in those letters, and additional guidance is provided below.