Fair Market Rent Less Than Initial Rent Charged by Landlord

Tenant, whose initial monthly rent was $2,200, filed a fair market rent appeal. The DRA ruled for tenant, set a fair market rent of $1,121, and ordered landlord to refund $20,500, including interest. Landlord appealed and lost. Landlord argued that the prior rent-controlled tenant moved out in 2001, that the apartment was then used commercially until 2009, and that the DRA didn’t consider the unique feature of exclusive backyard use when setting the fair market rent. Landlord also claimed that the DRA didn’t permit landlord’s review of comparable rents it used to set the fair market rent and ignored landlord’s comparables. In addition, landlord pointed out that the DRA converted the fair market rent appeal to an overcharge complaint.

The DHCR found that the DRA properly applied Rent Stabilization Code Section 2526.2(3)(iii) as amended in 2014 to determine the fair market rent. The initial rent for the apartment was properly determined based on the average rents of comparable apartments in the building, plus the appropriate vacancy guideline rent increase, plus a rent increase for individual apartment improvements. The way that the base rent of $1,121 and initial rent of $1,870 were set was clearly and correctly explained in the DRA’s order. Also, because the apartment was decontrolled more than four years before the base date of the complaint, the case couldn’t be processed as a fair market rent appeal. It didn’t matter whether the DRA formally notified landlord of this processing change. 

Noble Holding LLC: DHCR Adm. Rev. Docket No. ES410068RO (2/2/17) [4-pg. doc.]