DHCR Finds No Reason to Investigate Base Date Rent in J-51 Building

Tenant in a building that started receiving J-51 tax benefits in 2007 complained of rent overcharge. The DRA ruled against tenant, finding no rent overcharge. Tenant appealed and lost. Because the base date rent charged to tenant was $1,225 per month, which was less than the last rent paid by the prior tenant preceding the commencement of the J-51 abatement, the DRA correctly determined that $1,225 was the legal regulated rent. While the last registered rent prior to the commencement of the J-51 benefits was $509 for a term between Nov. 1, 2004, and Oct. 31, 2006, this wasn't the last rent paid prior to commencement of the J-51 benefits. There was a one-year lease executed for the apartment for the term commencing Nov. 15, 2006, and ending Nov. 30, 2007, at $1,250 per month. That rent shouldn't be subject to review or challenge as it isn't close to the deregulation threshold and doesn't show a fraudulent scheme to deregulate the apartment. Therefore, there was no reason to investigate the $1,250 rent paid by the last tenant prior to the J-51 benefits commencement. Landlord’s failure to register that rent wasn’t sufficient to show any willful malfeasance.

Kovacs: DHCR Adm. Rev. Docket No. EN610021RT (10/13/16) [5-pg. doc.]