DHCR Applied Amended Rules for Setting Rent After Temporary Exemption from Stabilization

Rent-stabilized tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $18,700, including interest. Landlord and tenant both appealed and lost. Landlord claimed that the apartment was temporarily exempt from rent stabilization between 2008 and 2012 due to owner occupancy and therefore he was entitled to set a fair market rent in 2013. Tenant claimed that the overcharge was willful and that triple damages should apply.

The DHCR noted that on Jan. 8, 2014, Rent Stabilization Code Section 2526.1(a)(3)(iii) was amended so that landlords could no longer set a fair market rent after an apartment was temporarily exempt on the base rent date. Since the prior tenant's rent was $505, the DRA properly added two-year rent guideline increases to the rent during the temporary exemption period to determine that tenant's initial legal rent was $567. And landlord suffered no undue hardship or prejudice from application of the amended code provision. But, since landlord relied on a prior Rent Stabilization Code provision to set tenant's rent, the resulting rent overcharge wasn't willful.

Bai/Weikart/Santino: DHCR Adm. Rev. Docket Nos. FO210029RO, FO210040RT (11/2/17) [4-pg. doc.]