DHCR Reasonably Set a First Stabilized Rent for SRO Unit

An SRO tenant became subject to rent stabilization in 2015, when a court granted tenant's illegal lockout petition and found that he qualified as a permanent tenant entitled to rent stabilization protection at the time he was forcibly removed from the building. Tenant then asked the DHCR to make a ruling on his apartment's legal regulated rent. In 2017, the DRA set the rent at $385 per month, using the DHCR's "sampling formula." Tenant appealed, and the DHCR reduced the legal rent to $353.50 per month. Tenant then filed an Article 78 court appeal of the DHCR's decision.

The court ruled against tenant, finding the DHCR's decision to be reasonable. The DHCR didn't use a default method but instead applied the sampling formula method, one of the methods listed in the Rent Stabilization Code. The unit wasn't previously rent stabilized, and there was no legal rent on record. It was therefore reasonable for the DHCR to apply the sampling method to set a legal rent for the unit. Under the default method, tenant's rent could have been set at $83 per month based on the rent in another unit. But that rent was set by private settlement agreement between landlord and another tenant, and therefore was unreliable and not an appropriate rent for the purpose of setting a legal rent here. 

Ahmed v. DHCR: Index No. 154835/2021, 2021 NY Slip Op 32234(U)(Sup. Ct. NY; 11/9/21; Edmead, J)