Default Formula Didn't Apply to Rent Overcharge Claim

Tenants sued landlord, claiming improper apartment deregulation and rent overcharge based on a fraudulent scheme to deregulate. They asked the court to set legal rents based on a default formula found in the Rent Stabilization Code. Tenants claimed that landlord filed rent registrations and issued leases that recited inflated legal regulated rents while designating the actual legal regulated rents as "preferential" rents.

The court ruled against tenants. The mere inclusion on the annual registration of an inflated legal regulated rent to which landlord would not be entitled, along with a claimed preferential rent actually charged to tenants, can't be considered fraudulent since there was no claim that tenants relied on any fictitious statements in the registrations and leases as to the amount of the legal regulated rent. Since there was no showing of a fraudulent scheme, the default formula didn't apply. Any rent overcharges found must be calculated upon the rents charged on the base date.

Armstrong v. Dumbo Lofts Rental LLC: Index No. 523862/19 (Sup. Ct. Kings; Landicino, J)