DHCR Finds No Indication of Fraud Warranting Review of Old Rents

(Decision submitted by Eileen O’Toole of the Manhattan law firm of Borah, Goldstein, Altschuler, Nahins & Goidel, P.C., who represented the landlord.)

Rent-stabilized tenant complained of rent overcharge. The DRA ruled against tenant, finding no overcharge during the four-year period before tenant filed his complaint. Tenant appealed and lost. Tenant claimed that landlord committed fraud in setting a rent before the base rent date and the DHCR therefore should look back more than four years to determine a rent overcharge. Tenant argued that the apartment was previously rented to his former domestic partner. When tenant’s name was added to a renewal lease in 2005, landlord fraudulently increased the rent by 12.75 percent. Tenant claimed that this was part of a fraudulent scheme to remove the apartment from rent stabilization. In response, landlord pointed out that the apartment had never been deregulated, and that when landlord added tenant as a co-tenant to the lease, landlord could have given both tenants a vacancy lease and collected a 16.25 percent rent increase.

The DHCR found no indication of fraud that would trigger the DHCR’s obligation to review the legality of the 2005 rent. The apartment hadn’t been deregulated, tenant had been given rent-stabilized leases, and the rent registrations were consistent with the leases. Landlord was permitted to collect a vacancy increase when a roommate was named on a lease. While tenant now argued that he was a family member when he was added to the lease in 2005, the DHCR couldn’t say 11 years later that this showed a fraudulent scheme to deregulate the apartment.

Davies: DHCR Adm. Rev. Docket No. EO410027RT (8/30/16) [3-pg. document]