Section 5(a)(5) of the Emergency Tenant Protection Act (ETPA) exempts from stabilization “housing accommodations in buildings completed or buildings substantially rehabilitated as family units on or after January first, nineteen hundred seventy-four.” Over the years, courts and the Division of Housing and Community Renewal (DHCR) have developed guidelines for determining whether a landlord, when rehabilitating a residential building, has performed work sufficient to warrant the exemption. Thus, while a total gut renovation would plainly qualify, a building that has undergone a superficial, incomplete, or inexpensive renovation will not.
In Bartis v. Harbor Tech, __ AD3d __, 45 NYS3d 116 (2d Dept. 2016), the Appellate Division, Second Department considered the issue of whether those guidelines apply where the landlord converts the building from commercial to residential use. The Second Department, following First Department precedent, held that commercial to residential renovation constitutes a substantial rehabilitation per se, and that the guidelines applicable to residential renovation work do not apply.
