First Rent Based on Average Rents in Building When Tenant Moved In

Tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $32,422, including interest. Landlord appealed and lost. Tenant moved into the apartment on Jan. 1, 2011, while the building was under a 7A administrator. The rent charged was $2,000 per month and landlord claimed that tenant was unregulated. Tenant claimed that the apartment had previously been vacant since 1984. Landlord bought the building in 2012 and received no prior rent records. Landlord argued that, since the apartment was vacant on the May 1, 2010, base rent date, the DHCR should apply former Rent Stabilization Code (RSC) provisions as they as they existed on that date. Prior to the January 2014 RSC amendments, the RSC provided that landlord and tenant could agree to a first rent if an apartment was vacant on the base rent date. But these code sections were now amended to provide that the rent could be increased only by guidelines increases over the last rent-stabilized rent. And RSC Section 2527.7 provided that, if a law is amended while a proceeding was pending, the new law applies. Sections 2526.1(a)(3)(ii) and 2522.6 further provided that if the rent charged on the base date couldn’t be established, the rent must be determined by the DHCR based on data compiled by the agency. Since there was no prior rent history for the apartment, it was reasonable for the DHCR to take an average on the rents in the building for the year that tenant took occupancy and add her vacancy allowance to establish the initial legal regulated rent. In this case, the rent was established by taking the average amount of rent in the building for the year 2011 ($1,375) and adding tenant’s 17.75 percent vacancy allowance.

200 Stanton LLC: DHCR Adm. Rev. Docket No. ER410027RO (10/26/16) [3-pg. doc.]