DHCR Default Formula Used to Calculate Legal Rent of SRO Unit

Rent-stabilized SRO tenant complained of rent overcharge. Landlord argued that the unit was vacant from 2007 until tenant moved in in October 2012 and that landlord therefore was entitled to charge a "first rent" of $750. The DRA asked landlord for a night auditor's report for December 2009 to prove the unit was vacant on the base rent date. Landlord submitted only a copy of "backup sheets" for 1997-2007. The DRA found that the base date rent was $768, using the SRO default formula of averaging comparables in the building. Since this was more than the amount charged to tenant, there was no overcharge. Tenant appealed and claimed that the registered 2010 rent of $240 was the legal regulated rent.

The DHCR ruled for tenant in part. Tenant incorrectly argued that the DRA should have relied on the 2010 registered rent. Since landlord failed to prove the Dec. 11, 2009, base date vacancy through registrations or contemporaneous rent records, the DRA properly used the default method to set the rent. But the DRA's average of comparables didn't yield the lowest rent amount that could be determined under Rent Stabilization Code Section 2522.6(b)(3). So, the case was sent back to the DRA for recalculation of the legal rent under the default formula.

Salvo: DHCR Adm. Rev. Docket No. FO410039RT (11/2/17) [4-pg. doc.]