DHCR Sets Legal Rent for Apartment Based on Rent Preceding Temporary Exemption

Landlord asked the DHCR in 2016 for a ruling on the legal regulated rent for an apartment. Landlord claimed that the apartment occupant had been the building's janitor until his employment was terminated in August 2015. The prior landlord had registered the apartment with a legal rent of $1,200 per month. The occupant claimed this was inaccurate. The DRA ruled for occupant, finding he was a rent-stabilized tenant and that the legal rent was $400 per month.

Landlord appealed and lost, then filed an Article 78 court appeal of the DHCR's decision. The parties agreed to send the case back to the DHCR for further consideration. The DHCR again ruled against landlord. RSC Section 2520.11(m) exempts apartments occupied by building service employees "without payment of rent." In this case, the janitor had lived in the apartment while working there for 33 years. For 10 of those years he paid $400 per month for rent. In the absence of a lease indicating a different rent, the DHCR determined that the rent paid by the janitor was the legal rent, and that he was rent stabilized.

Landlord filed another Article 78 court appeal, claiming that the DHCR's second decision was arbitrary and unreasonable. Again, the case was sent back to the DHCR for further consideration. This time the court ruled for landlord in part. Finding that it "may use its equitable powers to establish a rent in accordance with the purposes of rent regulation," the DHCR set the tenant's 2015 base date legal regulated rent at $1,200 per month rather than $400.  This was a reasonable rent amount set by landlord. The prior apartment rent before temporary exemption due to tenant's employment as the janitor was $1,200. And data compiled by the DHCR showed that the average rent in the same ZIP code for the same-sized apartment was $1,632, and the average rent in the same building for the same-sized apartment was $1,312.

31-36 32nd Street Owner LLC: DHCR Adm. Rev. Docket Nos. LU110002RP, JN110001RP, GM110012RO (1/19/24)[4-pg. document]