10-Year Sweetheart Lease Wasn't Valid Preferential Rent Agreement

Tenant complained of a rent overcharge. She paid $450 per month under a 10-year lease between Dec. 1, 1998 and Dec. 1, 2008. But landlord had begun filing annual apartment registrations that listed the legal rent as more than $450. Landlord claimed that tenant had a “sweetheart” lease and that the legal regulated rent was higher. The DRA found no overcharge, but directed landlord to file amended registrations listing $450 as the legal monthly rent. Landlord appealed and lost. Landlord claimed that tenant was friends with prior landlord, who was landlord’s father, and that tenant didn’t pay rent for the first two years of the lease since tenant made apartment improvements. Tenant claimed that there was no special relationship, but that the apartment was uninhabitable when she moved in. The DHCR found that a sweetheart lease was a form of preferential rent. And to be considered preferential, the rent must be defined as such in the lease. Since there was no written preferential rent agreement, tenant’s legal regulated rent was $450.

Duff: DHCR Adm. Rev. Docket No. XF410012RO (8/22/12) [4-pg. doc.]