1991 Rent Reduction Order Prevented Vacancy Deregulation of Apartment

Landlord sued to evict unregulated tenants for nonpayment of rent. Tenants claimed that they were rent stabilized and asked the court to dismiss the case. They also claimed rent overcharge, and sought attorney's fees. The court ruled against tenants, who appealed and won. Under rent reduction orders isued in 1989 and 1991, the DHCR found that the prior landlord failed to provide certain required services and had to reduce the apartment's legal regulated rent to under $300 per month. These orders created a continuing obligation on landlord and barred any further rent increases, including vacancy increases or IAI rent increases, until the DHCR issued a rent restoration order. It was undisputed that the DHCR hadn't issued any rent restoration order, so the apartment didn't become exempt from rent stabilization due to any high-rent vacancy that landlord claimed took place when tenants moved in. Tenants were entitled to an overcharge refund with triple damages, as well as attorneys' fees as the prevailing party.

Diagonal Realty, LLC v. Estella: Index No. 570110/21, 2021 NY Slip Op 51117(U)(App. T. 1 Dept.; 11/26/21; Edmead, PJ, Hagler, Silvera, JJ)