Court Denies Tenant's Appeal of DHCR Order Finding No Overcharge

Tenant complained to the DHCR of rent overcharge and fraudulent deregulation of her apartment. The DRA and DHCR ruled against tenant, finding that landlord didn't engage in a fraudulent scheme to deregulate the apartment, and finding no overcharge. Tenant filed an Article 78 court appeal, claiming that the DHCR's decision was arbitrary and capricious. The court ruled against tenant, who appealed and lost. Based on the evidence submitted to the DHCR, the appeals court found that the DHCR had a rational basis to conclude that landlord didn't engage in a fraudulent scheme to deregulate, and for calculating the legal regulated rent in the manner that it did. The DHCR also had a rational basis for relying on the legal regulated rent set in a 2005 order resulting from the prior tenant's overcharge complaint and declining to look back any further. And the mere fact of a rent increase in 2001, without more, was insufficient to establish a fraudulent scheme to deregulate. The court also rejected tenant's attempt to collaterally attack the prior, 2005 DHCR order in this proceeding. In that case there was no finding of fraud and no overcharge award. The DHCR also gave tenant adequate time to secure an attorney and submit a response and an opportunity to be heard in a meaningful manner. 

Hefti v. DHCR: Index No. 158290/22, App. No. 2768-2769, Case No. 2023-04790, 2024-00198, 218 NYS3d 64, 2024 NY Slip Op 05022 (App. Div. 1 Dept.; 10/10/24; Kern, JP, Oing, Kennedy, Higgitt, Michael, JJ)