Default Formula Used to Set Legal Rent

Subtenant sued tenant and landlord, claiming illusory tenancy. In 1992, the legal rent for the rent-stabilized apartment had been $508. Landlord rented the apartment to tenant that year and charged him $2,400 per month because tenant agreed not to use the apartment as his primary residence. In 1993, tenant rented the apartment to subtenant for $3,250 per month. The court ruled for subtenant and found that he was entitled to a rent-stabilized lease. The court then set tenant's legal rent by applying the DHCR's default formula to the rent in effect in November 1996, four years before subtenant filed his complaint. Subtenant appealed. He claimed that the court should use the last actual legal rent of $508 as his legal rent. The appeals court ruled against subtenant. The rent was last paid at a lawful rate eight years before subtenant sued. Since the apartment had been treated as exempt for more than four years, the court must set a new base rent using the DHCR's default formula. Notably, two of the appeals court judges disagreed and would have ruled for subtenant.

Thornton v. Baron: NYLJ, 3/1/04, p. 26, col. 1 (App. Div. 1 Dept.; Buckley, PJ, Tom, Rosenberger, Williams, Friedman, JJ)