Court Applies Default Method to Determine Rent Overcharge

Tenants sued landlord, claiming improper apartment deregulation and rent overcharge. The court ruled for tenants in 2017, determined that they were rent stabilized, ordered landlord to give them a rent-stabilized lease, and referred the issue of rent overcharge to a Special Referee.

The Referee's report didn't contain rent calculations but instead simply contained factual findings and recommendations. Tenants then asked the court to partially confirm and partially deny the Referee's report. In the meantime, an appeals court denied landlord's appeal of the court's decision, which directed the Referee to use the default formula of Rent Stabilization Code (RSC) Section 2522.6(b)(2) to determine tenant's base rent on the theory that the base rent was the product of a fraudulent scheme to deregulate the apartment. Landlord now also disputed some specific findings.

The court agreed with landlord that, under the applicable RSC provision, the base date rent should be fixed as the lowest rent registered for a comparable apartment in the building in effect on the date when the complaining tenants first occupied the apartment. Since the Referee didn't provide calculations as the court requested, the court directed tenants to present an accounting of the calculation of the rent overcharge amount utilizing the base date rent that the court found applied, followed by all legally permissible increases. As previously determined, the overcharge is subject to triple damages. The question of attorney's fees would be determined in a separate hearing.

Kreisler v. B-U Realty Corp.: 2019 NY Slip Op 32920(U) (Sup. Ct. NY; 10/3/19; James, J)