DHCR Sets Rent-Stabilized Rent by Deeming Renewal Increases from 1984 Forward

Landlord claimed that a vacant apartment was permanently exempt from rent stabilization and asked the DHCR to determine the legal rent. Landlord claimed that there were limited rent history records due to prior building mismanagement; the last registered rent was $1,850 in 2004; prior tenants were nonprimary residents; and they used the apartment as a boarding house. The DRA ruled that the current legal regulated rent for the apartment was $625, based on adding deemed one-year renewal leases from 1984 through 1995, and then by deeming two-year renewal leases from 1998 through 2014.

Landlord appealed and won, in part. Since the unit was temporarily exempt or vacant on the applicable base date, the DRA applied the correct methodology under Rent Stabilization Code Section 2526.1(a)(3)(iii) to set the rent. Since the tenants in occupancy in 2004 were using the apartment as a short-term boarding house, the DRA also correctly used the 2004 registered rent for calculation purposes since the tenancy was illusory and unreliable. The DRA’s decision not to use the default method to set the rent was also correct. But the DRA should also have deemed a renewal lease in 1997, and the DHCR increased the legal regulated rent from $625 to $671.

229 West 109 Street Realty Corp.: DHCR Adm. Rev. Docket No. DU410004RO (12/8/16) [4-pg. doc.]