Court Revokes DHCR Ruling That Apartment Was Vacancy-Deregulated

Tenant complained to the DHCR of rent overcharge and improper deregulation. The DRA ruled for tenant and ordered landlord to refund $6,150, including triple damages. Landlord appealed, and the DHCR revoked the DRA's decision, finding that the apartment wasn't subject to rent stabilization. Tenant then filed an Article 78 petition, claiming that the DHCR's decision was arbitrary and unreasonable. The DHCR asked the court to send the case back for further review of tenant's PAR.

The court found that the DHCR's current PAR decision was in error. That decision was based on an erroneous interpretation of the RSL and the Court of Appeals 2018 ruling in Altman v. 285 West Fourth LLC. The RSL provides that an apartment becomes deregulated after a vacancy when the legal stabilized rent was $2,000 or higher at the time of the vacancy, or when an apartment becomes vacant and the available statutory increases applicable to the unit after the tenant's vacancy raise the rent to $2,000 or more. Therefore, it is the legal stabilized rent at the time of the vacancy plus any legally applicable increases, not the first post-vacancy rent agreed to, that determines whether the apartment is deregulated.

In this case, while landlord claimed that the apartment was vacant on the May 31, 2009, base date, tenant argued there was no proof of this. And landlord didn't file a rent registration for 2008, but then filed an "exempt" registration in 2009. Since there was no 2008 registration, there was no proof of how the apartment became exempt. Landlord never showed that the legal regulated rent went over the $2,000 threshold to deregulate the unit. So, the court granted tenant's petition, denied the DHCR's request to send the case back to the agency for further consideration, and reduced the apartment's legal regulated rent to the last registered rent of $1,266.

Anderson v. DHCR: Index No. 500086/2021, 2023 NY Slip Op 31970(U)(Sup. Ct. Kings; 6/12/23; Saitta, J)