The Real Estate Tax Compliance Program - FAQs



  • Why did I receive the August 25, 2015 Letter?
  • As stated in the letter, (i) your building is receiving a 421-a partial property tax exemption; (ii) you are renting residential units to tenants; (iii) no condominium offering plan submitted to the NYAG has been consummated; and (iv) you have failed to register those units as rent stabilized with the DHCR as required by law.  As rental units in buildings receiving 421-a benefits are required to be rent stabilized, this program allows property owners to bring their properties into compliance and register their residential units as rent stabilized without penalty.  This is a unique opportunity to bring your property into legal compliance and avoid potential revocation of your 421-a benefits by HPD and investigation and potential enforcement action by NYAG and/or DHCR.

  • How do I get my building into compliance? 
  • By following the steps outlined in the August 25, 2015 letter, you will get your building into compliance and avoid potential revocation of your 421-a benefits by HPD and investigation and potential enforcement action by NYAG and/or DHCR.

  • How do I give notice to tenants as to the rent stabilized status of their units? 
  • A standard notice form is available here>.  This notice should be delivered by hand to each unit at your building and a copy of the notice should be posted in a prominent place in the lobby or lobbies of the building by the deadline set forth in the August 25, 2015 letter.

  • How do I abandon my offering plan? 
  • Submit a completed Form RS-3, Notification to the Attorney General of the State of New York of Abandonment of Offering Plan, to the NYAG, Real Estate Finance Bureau.  The Form RS-3 is available here.

  • A Declaration of Condominium for my building is recorded in the property records with the Department of Finance.  How do I terminate a Declaration of Condominium?
  • To terminate a Declaration of Condominium, first submit an application for a Letter of No Objection to Termination of a Declaration of Condominium to the NYAG, Real Estate Finance Bureau, 28 Liberty Street, New York, New York  10005.  Instructions on how to submit this application are detailed in the NYAG’s January 22, 2015 guidance document, “ Letters of No Objection to Termination of Condominium Declaration,” available >here. Then record a Termination of a Declaration of Condominium with the New York City Department of Finance, Office of the City Register within seven (7) calendar days from receipt of the Letter of No Objection from the NYAG.

  • Do I need to return purchaser deposits? How do I return purchaser deposits? 
  • If you are continuing as a rental building, your escrow agent may not continue to hold purchaser deposits. Assuming that you comply fully with all of the conditions of the August 25, 2015 letter, you may direct your escrow agent to release all funds to purchasers, and provide the NYAG with an affidavit of compliance in lieu of filing an amendment. Because you will be abandoning the plan, NYAG will not require you to file an amendment prior to the return of these funds. Because your offering plan is being abandoned, your escrow agent must return all funds to purchasers.

  • How do I correct my filings with HPD?
  • You must submit to HPD all documentation required to amend or supersede the prior filings made in connection with the property to reflect that the property is owned and managed as a rental building, and to calculate the HPD-approved rents.  These documents must include:

    Further information is available at HPD’s website.
    For assistance with this process, call the HPD 421-a customer service line at (212) 863-8540.

  • How do I register apartments in my building with DHCR? 
  • After receiving HPD-approved rents for the property, submit to DHCR initial registration forms for your building and its units, which are available here.  Annual registrations for each unit in the property and the summary registrations for each year since the units were occupied must be submitted via the Annual Rent Regulation Online system (ARRO) after DHCR inputs your building and units into its system. Information regarding ARRO can be found here.  The legal rent that you register for the initial year (i.e., the first year that the units were rented), must be the lower of:  (i) the HPD-approved rent; or (ii) the monthly rent reflected in the lease for each tenant for that year.  The registered rent for the subsequent years must be in accordance with the laws that establish the permissible increases for rent. 

    Further information, including fact sheets regarding your obligations as an owner and permissible increases in rent, is available at DHCR's website.  Building owners who need further assistance may contact one of DHCR’s Rent Information offices and schedule an appointment:

    Bronx   (718) 430-0880
    Brooklyn   (718) 722-4778
    Queens   (718) 262-7952
    Lower Manhattan   (212) 480-6238
    Upper Manhattan   (212) 961-8930

     

  • What if, after applying the increases allowed by the Rent Guidelines Board and the Rent Stabilization Law and Code, the calculated rent for the current lease year is higher than the rent currently being charged and collected under the non-rent stabilized lease?  Can I increase the rent and charge my tenant the calculated rent?  Which rent do I register for the current year?  How do I calculate the subsequent year’s rent?
  • No, you cannot charge and collect from your tenant the higher calculated rent.  The current lease rent that is charged and collected becomes the legal rent that must be registered with DHCR and must continue to be charged to the tenant.  If an owner wants to charge and collect a lower preferential rent than what is legally permissible and maintain the higher legal regulated rent for the apartment, the Rent Stabilization Law and Code requires the owner to preserve that higher lawful rent in the lease at the moment the owner offers the tenant the lower preferential rent.  See DHCR’s Fact Sheet #40, available here. If you did not preserve the higher lawful rent in the non-stabilized lease currently in effect, you must register the lower rent that is currently charged and collected with DHCR and list this lower rent as the Iegal regulated rent in the rent stabilized lease.  You effectively waived your right to collect and register the higher calculated rent without this preservation.  When you calculate the subsequent year’s rent, you must base any increases off this lower rent, which is registered as the prior year’s legal regulated rent.  You cannot base any permissible increases off the higher calculated rent that was waived. 

  • What if I know that I own properties that are not in compliance with 421-a, but I did not receive the August 25, 2015 Letter with regard to those properties? 
  • The August 25, 2015 mailing was targeted to a select group of buildings where filings with the NYAG and HPD indicated these buildings would be owned as condominiums.  The investigation is ongoing and other buildings not in compliance with 421-a are continuing to be identified.  If you are aware of other buildings that are receiving 421-a benefits intended for condominium ownership but are instead operating as rental buildings, you may alert the NYAG by sending an e-mail to 421aCompliance@ag.ny.gov.  Other violations of the 421-a tenant protection provisions, the rent stabilization laws, and issues of rent overcharges should be directed to TPU:

    NYS Homes & Community Renewal
    Tenant Protection Unit
    Gertz Plaza
    92-31 Union Hall Street
    Jamaica, New York  11433
    Phone:  (718) 739-6400
    E-mail:  TPUinfo@nyshcr.org

  • What if I feel that I have received the August 25, 2015 letter by mistake; for example, what if I am not receiving 421-a benefits, or have not rented any apartments, or if I have already registered all my apartments with DHCR? 
  • By September 15, 2015, you may email a letter of explanation along with proof that your building is not violating the requirements of 421-a to both the NYAG and TPU at 421aCompliance@ag.ny.gov and TPUInfo@nyshcr.org. Please include “421-a Compliance Program: [Address of building]" in the subject matter line.

  • My building is a condominium and is therefore exempt from having to register rentals with the DHCR as rent stabilized.  Why did I receive the August 25, 2015 Letter? 
  • Having filed a Part 20, unoccupied condominium offering plan with the NYAG, or recording a Declaration of Condominium, does not insulate your project from having to comply with the rent stabilization laws if you are renting and your building is receiving 421-a property tax benefits.  For more information, and further explanation as to the requirements of the Martin Act (Article 23-A of the New York General Business Law) and the governing regulations, please see the NYAG’s July 10, 2015 guidance document, "Occupied Buildings and Part 20 Offerings".

  • What if I still want to sell the units at my building as condominiums?
  • If you would like to explore selling units at the Property as condominiums, please refer to the enclosed guidance document, “Occupied Buildings and Part 20 Offerings.”  As is discussed therein, you must comply with the requirements of the Martin Act applicable to converting residential rental buildings to condominium status and submit to the NYAG an amended and restated offering plan pursuant to 13 NYCRR Part 23.  The guidance document is also available on the NYAG website.

    To explore this possibility, by Friday, October 2, 2015, you must call Ryan Ridings of the NYAG at (212) 416-8671 for further information.

    Note that you will be required to register with DHCR any currently occupied rental dwelling units at the Property as rent stabilized .

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