DHCR Must Apply Four-Year Rule to Overcharge Claim Where No Fraud Was Found

Tenant filed a complaint of rent overcharge, claiming that his apartment had been improperly deregulated. The DHCR ruled for tenant and found no fraud or willful rent overcharge. The apartment was rent stabilized, and the DHCR set the base date rent by looking back more than four years to the last legal regulated rent as a starting point for calculating the legal base date rent. The building had received J-51 tax benefits from July 1, 1999, through June 30, 2013, and was subject to rent stabilization before, and independent of, the J-51 benefits. The DHCR found that landlord incorrectly gave tenant a vacancy-deregulated lease when tenant moved into his apartment in 2007. Landlord and tenant both appealed and lost.

Both sides then appealed to a higher court. The appeals court ruled that the DHCR reasonably determined that there was no fraud and no willful rent overcharge. But since there was no fraud, the DHCR was prohibited from looking at the unit's rental history before the four-year base date in 2005. The appeals court disagreed with a prior appeals court ruling in Taylor v. 72A Realty Associates (LVT #27720), which, like the DHCR in this case, had permitted review of pre-base date rent history to determine the legal base date rent. The case was sent back to the DHCR to recalculate the rent overcharge.

Regina Metropolitan Co., LLC v. DHCR: 2018 NY Slip Op 05797, 2018 WL 3885121 (App. Div. 1 Dept.; 8/16/18; Friedman, JP, Gische [dissenting], Kapnick [dissenting], Kahn, Moulton, JJ)