DHCR Used Incorrect Default Formula

(Decision submitted by Karen Schwartz-Sidrane of the Hewlett, N.Y., law firm of Sidrane & Schwartz-Sidrane, LLP, attorneys for the landlord.) Rent-stabilized tenant complained of a rent overcharge. The DHCR ruled for tenant and ordered landlord to refund $4,700. Landlord appealed, claiming that the DHCR's decision was unreasonable. The court ruled against landlord. Landlord appealed and won. The appeals court sent the case back to the DHCR for recalculation of the initial base rent. The DHCR's decision to use a default formula to set tenant's rent was reasonable given the lack of proof of the base date rent. But the DHCR used the wrong default formula. The agency used the default method set forth in its 1994 internal processing directive. But in December 2000, a different default formula was added to the Rent Stabilization Code. The DHCR claimed that the new default formula would cause hardship to tenant, so it was allowed to use the old default formula. But the DHCR had no proof of any tenant hardship. The DHCR must recalculate the legal rent using the new default formula.

Cabrini Realty LLC v. DHCR: NYLJ, 4/26/04, p. 26, col. 1 (App. Div. 1 Dept.; Buckley, PJ, Saxe, Ellerin, Marlow, Gonzalez, JJ)