DHCR Improperly Refused to Consider Leases Submitted on Appeal

(Decision submitted by James R. Marino of the Manhattan law firm of Kucker & Bruh, LLP, attorneys for the landlord.) Tenant complained of a rent overcharge. The building was in receivership at the time. While the complaint was pending, landlord bought the building at a judicial sale. The DRA then converted tenant's complaint to a fair market rent appeal and asked landlord to submit lease records from 1991 and later. Landlord had no rent history records. The DRA ruled for tenant and ordered landlord to refund $21,000. Landlord appealed. Landlord claimed that it had to refund only overcharges it collected because it bought the building at a judicial sale. Landlord also had now obtained tenant's leases and showed that tenant received a preferential rent. The DHCR ruled for landlord in part. It reduced the amount of refund landlord had to pay to $15,000. But the DHCR didn't consider the leases landlord submitted. Landlord appealed, arguing that the DHCR's decision was unreasonable. The court ruled for landlord. When the DHCR processed the complaint as a fair market rent appeal, it informed landlord that the apartment was rent controlled until 1991 and requested only leases from after that date. The leases landlord found later were from before 1991. Since the DRA hadn't requested leases from this period, the DHCR should have accepted these records from landlord with its PAR. The case was sent back to the DHCR to recalculate the legal rent and any resulting overcharge.

SRB Realty Corp. v. DHCR: Index No. 119470/03 (Sup. Ct. NY 3/12/04; Beeler, J) [7-pg. doc.]