Apartment Was Vacancy-Deregulated Before Tenant Moved In

(Decision submitted by Elizabeth A. Lentini of the Manhattan law firm of Borah, Goldstein, Altschuler, Nahins & Goidel, P.C., attorneys for the landlord.)

Tenant complained of rent overcharge. The DRA ruled against tenant, finding that a legal rent of $2,895 was paid in 2014 by the prior tenant. This rent was above the $2,500 deregulation threshold in effect at the time. So, the apartment was vacancy deregulated when tenant moved in and he wasn't subject to rent stabilization.

Tenant appealed and lost. Tenant claimed that landlord hadn't justified the rent increase that brought the 2014 base rent of $1,628 to over $2,500. Tenant also questioned individual apartment improvement (IAI) rent increases in 2006 and 2014. Tenant claimed that landlord's IAI costs were grossly inflated and that there were discrepancies in the IAI proof submitted. 

Because tenant's complaint was filed in 2018, the DHCR applied the Rent Stabilization Law and Code provisions that were in effect before HSTPA was enacted on June 14, 2019. The DHCR found that landlord didn't engage in a fraudulent scheme to deregulate the apartment. So RSC Section 2526.1 prohibited examination of rental events prior to the base date four years prior to the date tenant filed his complaint.

As to the 2006 IAIs, the DHCR said that it need not review every element of a landlord's entitlement to an IAI increase taken before the base date to make a finding on the issue of potential owner fraud. Based on landlord's documentation, there was no reason to assume that the work set forth on the contract, and actually paid for by the checks, was not performed and paid for. The lease for the first tenant after the 2006 IAIs set forth the exact and proper calculation of the legal rent for that tenant. The DHCR also found that the 2014 IAIs were properly documented. The DHCR also confirmed the work by inspection. And permits, or lack of permits, wasn't relevant to whether IAIs were performed, paid for, and qualified for IAI rent increases.

Castillo: DHCR Adm. Rev. Docket No. IV410015RT (5/20/21) [6-pg. doc.]