Apartment Was Properly Deregulated After J-51 Benefits Expired

Tenant complained of rent overcharge, claiming that the building received J-51 benefits and his apartment was improperly deregulated. The DRA ruled against tenant, finding that the building's J-51 benefits had expired before tenant moved into the apartment in 2008, and the legal regulated rent was more than $2,000 at that time. So the apartment was exempt from rent stabilization.

Tenant appealed and lost. A prior lease in effect on the base rent date, four years before tenant complained, showed a monthly rent of $3,064. There was no evidence of fraud since landlord had a reasonable belief in 2008 that the apartment was vacancy deregulated, based on the DHCR's interpretation of the J-51 law prior to the Court of Appeals ruling in Roberts v. Tishman Speyer Properties LP in 2009. The fact that landlord gave non-stabilized leases and didn't register the apartment didn't warrant a finding of fraud, since there was no proof that landlord improperly increased the rent during the period of regulation while the J-51 benefits were pending. In addition the first rent-stabilized tenant to occupy the apartment after rent control in 2007 paid $2,800 per month and no fair market rent appeal was filed to challenge this rent. 

Mayer: DHCR Adm. Rev. Docket No. ET410078RT (6/2/17) [5-pg. doc.]