Apartment's Initial Legal Regulated Rent No Longer Subject to Challenge

Tenant complained in 2017 of rent overcharge and improper apartment deregulation. The DRA ruled against tenant, finding that the unit had been rent-controlled until it became temporarily exempt from rent regulation between 1990 and 2009 while the building super lived there. When the super moved out, the next tenant paid $1,900 per month. A subsequent tenant moved into the unit on May 1, 2010, at which point the apartment became legally vacancy-deregulated.

Tenant appealed and claimed that there was no proof that the super ever lived in the apartment. The DHCR ruled against tenant, and found that the super's occupancy created a temporary exemption from rent regulation, that the next $1,900 rent was the initial rent-stabilized fair market rent, subject to a four-year challenge, and that there was no basis now to challenge that rent.

Tenant then filed an Article 78 court appeal, and the court sent the case back to the DHCR for reconsideration based on its finding of "numerous factual discrepancies" concerning the 2009 rent.

On remit, the DHCR again ruled against tenant. There was no dispute that the unit was rent controlled until 1990, when the rent-controlled tenant became the building super. It was now determined that the apartment remained rent controlled until 2009 because the super had been the rent-controlled tenant both before and after his employment as building super. The apartment then became rent stabilized for the first time in 2009 and the initial legal regulated rent was $1,900. The landlord spent $38,000 on individual apartment improvements (IAIs) and properly charged $1,900 as the fair market rent. That rent was no longer subject to challenge. And the apartment was properly deregulated when the next tenant moved in.

O'Gorman: DHCR Adm. Rev. Docket No. IW410002RP (3/1/21) [11-pg. doc.]