DHCR Improperly Decided Overcharge Issue in AD Proceeding for Regulatory Status Determination

Tenant asked the DHCR for an administrative determination (AD) that his apartment was rent stabilized and to set the legal rent. Tenant claimed that he moved into the unit in 2008 and that landlord had fraudulently deregulated the unit. Landlord argued that the apartment was previously vacancy-deregulated through permissible rent increases for a vacancy allowance and individual apartment improvements (IAIs). The DRA ruled for tenant, finding that landlord failed to prove its IAI claims. The DRA also calculated the legal rent from the last registered rent-stabilized tenant, and continuing forward with each succeeding lease. The DRA reduced tenant's rent, ordered landlord to refund any overcharge, and advised tenant to file a rent overcharge complaint if landlord didn't refund the overpayment.

Landlord appealed, claiming that the DRA incorrectly looked back more than four years for its overcharge ruling. The DHCR ruled against landlord, who then filed an Article 78 court appeal. The court granted DHCR's request to take the case back for further consideration.

On remand, the DHCR ruled for landlord in part. The agency still found that the apartment was rent stabilized because landlord failed to document the claimed IAI rent increase. But the portion of the order directing a refund of overcharges was removed. The AD proceeding was for determination of the tenant's regulatory status. An overcharge claim is distinct from a regulatory status claim and was improperly addressed in the AD proceeding. And, since tenant had now filed an overcharge complaint, that issue would be decided in that separate proceeding.

536 E. 5th St. Equities: DHCR Adm. Rev. Docket No. JO410002RP (11/9/22)[4-pg. document]