DHCR Must Consider Rent Overcharge Scheme that Appears Fraudulent

Tenant complained of rent overcharge. The DHCR ruled against tenant, who then filed an Article 78 court appeal, claiming that the DHCR's decision was arbitrary and unreasonable. The court ruled for tenant. The DHCR found that landlord didn't file improper rent registrations in order to exit rent regulation. But in a case involving another tenant in landlord's building, the DHCR found that landlord's practice of using 28-day receipts was "clearly an attempt by the owner to evade rent regulation requirements." The same practice was used by landlord in registering tenant's apartment. In addition, a lease provision purporting to exempt an apartment from rent stabilization in exchange for an agreement not to use the apartment as a primary residence was against public policy and void. There also was evidence that raised the strong possibility of a fraudulent scheme by landlord to remove the apartment from rent stabilization. Landlord's registrations from 2004 to 2007 were fraudulent, and by restricting the rooms in the building to transient tenants, landlord was able to increase prior tenant's rent from $280 to $450 per month before tenant moved in. The court sent the case back to the DHCR for reconsideration.

Campbell v. DHCR: Index No. 19809/12, NYLJ No. 120261209879 (Sup Ct Kings; 7/1/13; Ruchelsman, J)