DHCR Can Look Back More Than Four Years to Determine If Rent Was Preferential

Tenant complained of rent overcharge. The DRA asked landlord to explain how the rent increased from $748 for the prior tenant in 2007 to $2,100 per month in 2008 when tenant moved in. Landlord claimed that the DRA’s request was time barred because the base rent date for tenant’s complaint was in 2012 and there was no proof of fraud that would warrant going back more than four years. The DRA ruled for tenant and ordered landlord to refund $16,745, including triple damages and interest.

Landlord appealed and lost. Landlord argued that the DRA had no rational basis for requesting records prior to the base date or imposing an overcharge when landlord didn’t produce those documents. But landlord’s claim that fraud is the only exception to the four-year statute of limitations on reviewing rent history in overcharge proceedings was incorrect. Under amended Rent Stabilization Code Section 2526.1(a)(2)(viii), the DRA was entitled to review rent history of the apartment prior to the base date to determine whether landlord was charging a preferential rent and had legally established the purported higher legal regulated rent. Since landlord didn’t submit the records requested by the DRA, landlord failed to prove the legality of the higher legal regulated rent of $2,100, which landlord claimed deregulated the apartment. 

West 151 Street Associates LLC: DHCR Adm. Rev. Docket No. DX410030RO (5/9/16) [6-pg. doc.]