DHCR's Finding of No Rent Overcharge Upheld as Rational and Based on Record

Tenant complained to the DHCR of rent overcharge and improper apartment deregulation. The DHCR ruled against tenant, finding no overcharge and that landlord had registered the unit as rent stabilized. Tenant then filed an Article 78 court appeal of the DHCR's decision in 2023. Landlord was joined to that proceeding and made its own claims.

The court ruled against both parties. The DHCR had ruled that the apartment should've been treated as rent stabilized by the prior owner during a prior tenant's 2004-2007 tenancy. The prior owner gave that tenant an unregulated lease and never registered the apartment as rent stabilized at any time between 2004 and 2015, when it sold the building to current landlord. It then took current landlord another three years to register the prior tenant's lease as rent stabilized. This was almost nine years after the complaining tenant moved in and only two months before he filed his DHCR complaint.

The DHCR ruled that since the apartment was never properly or timely treated by any owner as rent stabilized, "it could not have been removed from rent-stabilization based on high-rent vacancy deregulation." So, it was lawful and rational for the DHCR to have concluded that the apartment never lost its status as a rent-stabilized unit.

The DHCR's order that landlord must offer tenant a rent-stabilized renewal lease was rational, supported by the record, and wasn't arbitrary or capricious. The DHCR also rationally found that tenant hadn't been overcharged. The prior tenant's rent was lawful, and tenant had been charged $1,900 per month for at least 10 years. This rent was less than prior tenant's rent.

Cheng v. DHCR: Index No. 155861/2023, 2024 NY Slip Op 34469(U)(Sup. Ct. NY; 12/23/24; Kelley, J)