Building Bought at Judicial Sale

In January 1979, tenant complained of a rent overcharge. Landlord submitted leases dating from January 1976 forward, explaining he had no earlier leases because he'd bought the building at a foreclosure sale. Based on this incomplete rental history, the CAB ruled that tenant had been overcharged. The CAB set the rent at the 1974 rent control rate. Landlord appealed, arguing that, under the circumstances, he'd provided all the rental information he could. The DHCR ruled that a new policy would apply to overcharge complaints involving judicial sale purchasers. When rent records are unavailable due to a judicial sale, the legal rent will be calculated by averaging: (a) the lowest rent in the apartment line; (b) the tenant's initial rent, less the guideline increases; and (c) the prior tenant's rent if known. Also, the rent will be frozen for three years or two lease terms, whichever is longer, beginning with tenant's initial lease date. Applying the new policy resulted in a reduced overcharge.

Herman Management Inc.: DHCR Adm. Rev. Dckt. No. BF 410028-RO (5/27/94) [3-page document]