DHCR Can't Reconstruct Rent History

Facts: Tenant complained of a rent overcharge. Landlord submitted a full rent history to the DRA. One prior lease was for 10 months---from Nov. 1, 1980, through Aug. 31, 1981---instead of the usual one or two years. The DRA reconstructed the rent history to deem a one-year lease for this period, ending Oct. 31, 1981. This change created two rent hikes within one rent guidelines period. Since this wasn't permitted, the DRA found there was a rent overcharge. Landlord appealed; the DHCR ruled against landlord and implied that landlord's conduct was fraudulent. Landlord appealed again. Court: Landlord wins. The court ruled for landlord. The DHCR appealed, and the appeals court again ruled for landlord. The DHCR's action was arbitrary and capricious and not based on supporting documentation in the record. There was no proof of fraud on landlord's part, and the DHCR hadn't investigated the supposedly ''suspicious'' 10-month lease. Therefore, the 10-month lease was valid. The case was sent back for the DHCR to restructure the rent history of the apartment using the actual lease term.

Matter of Demetrious: NYLJ, p. 33, col. 6 (5/13/94) (App. Div. 2 Dept.; Balletta, JP, Copertino, Hart, Krausman, JJ)