Default Formula Applied Where No Base Date Lease or Rent Ledger Available

Rent-stabilized tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $7,640, including triple damages. The DRA also set the base date rent as $1,400 per month based on the pre-base date lease submitted by landlord.

Landlord and tenant both appealed. The DHCR found that the DRA had mistakenly calculated the overcharge for only a 21-month period, and recalculated the total overcharge at $8,270. Tenant then filed an Article 78 court appeal, claiming that the DHCR's decision was arbitrary and unreasonable. The case was sent back to the DHCR for reconsideration.

The DHCR then found that the base date rent couldn't be determined because landlord failed to produce a base date lease or rent ledger. So, under Rent Stabilization Code Section 2522.6, the DRA should have applied the default formula to determine the base date rent four years prior to the date tenant filed his complaint in January 2012. Taking the lowest stabilized rent from the DHCR's registration information for the same size apartment in the same building, the base date rent was $657.50. And landlord couldn't increase the lawful rent until the expiration date of tenant's current lease or, if there was no lease currently in effect, landlord couldn't increase the rent until the first rent payment date occurring no less than 90 days after the date that a proper lease offer was made to the tenant.

The amended overcharge finding, reflecting a refund due for the determined period between July 15, 2010, and Aug. 31, 2015, required landlord to refund $165,290, including triple damages. It didn't matter whether landlord had engaged in fraud. The default formula is applied equally in cases where landlord has engaged in fraud and in cases where the base date simply can't be determined or the rent history is unavailable.

Goldstein: DHCR Adm. Rev. Docket No. IN410011RP (9/16/20) [8-pg. doc.]