DHCR Improperly Rejected Landlord's Comparability Data

Facts: Tenant moved into apartment in March 1986. In May 1987, he filed a rent overcharge complaint. The DHCR converted tenant's complaint to a fair market rent appeal. The DHCR ruled for tenant, reducing his monthly rent by $1,300. Since the DHCR's final PAR ruling was made five years after tenant's complaint, the total refund due tenant was over $150,000. Landlord appealed, claiming the DHCR unfairly rejected the comparability data it had submitted. The DHCR rejected landlord's data because (1) landlord didn't submit proof of service of RR-1/DC-2 notices for some of the comparable apartments, (2) landlord didn't send further requested information, and (3) the apartments for which landlord had submitted comparables were for four-room units, but tenant's apartment had five rooms. Court: Landlord wins. The DHCR could request proof of service of RR-1/DC-2 notices for comparable apartments in landlord's building. But landlord had also submitted comparability data for apartments in other buildings not owned by landlord, which it can do under the rent stabilization law. It was improper for the DHCR to require proof of service of RR-1/DC-2 notices from landlord for these other apartments; landlord had no control over that information. The DHCR also rejected landlord's comparables because landlord had served the RR-1/DC-2 notices by personal delivery instead of by certified mail. This was wrong because under the DHCR's own Policy Statement 92-3, the certified mail requirement went into effect for notices served only on or after May 1, 1987. Landlord's notices were served before that date. The DHCR also found that landlord didn't send rental data for all the apartments in tenant's line of apartments. Some of those apartments were rent-controlled; landlord wasn't required to send the DHCR this information. The DHCR was also wrong to reject landlord's comparables for the four-room apartments in its building. DHCR Operational Bulletin 92-1 states that if no same-size comparables are available, apartments with a different number of rooms may be used.

Parcel 242 Realty v. NYS DHCR: NYLJ, p. 22, col. 5 (4/27/94) (Sup. Ct. NY; Ramos, J)