Base Rent Set Using Average of Comparable Rents

Tenant complained of rent overcharge by the building's 7A Administrator. The DRA ruled for tenant and ordered landlord to refund $11,858, including interest. Since there were no rent history records for the apartment, the DRA set tenant's initial rent by adding a 20 percent vacancy increase to the average of rents of all comparable units in the building. The DRA didn't allow any rent increase for individual apartment improvements (IAIs) since there were no supporting documents.

Tenant appealed and lost. Tenant claimed that there was fraud and that the DRA should have looked back further than the April 20, 2011, base rent date. Tenant claimed that the DRA should have used the DHCR's default formula to set the rent. The DHCR found there was insufficient proof of a fraudulent scheme to deregulate the apartment. The appointment of the 7A Administrator, and the fact that the 7A Administrator didn't have rent records didn't show fraud. The Administrator didn't file improper rent registrations or attempt to amend registrations. And it was proper for the DRA to use the average rents of comparable apartments to set tenant's rent since the apartment was the subject of a judicial action to appoint a 7A Administrator. There also was no proof of willful rent overcharge by the 7A Administrator.

Zelt: DHCR Adm. Rev. Docket No. FR410031RT (1/23/18) [6-pg. doc.]