First Rent Charged After Base Date Exemption Is Legal Rent

Tenant filed a fair market rent appeal, claiming that his rent was excessive. Tenant had moved into the apartment on Aug. 1, 2004. Landlord had charged tenant a legal regulated rent of $2,031 and gave tenant a preferential rent of $1,800. Landlord stated that the apartment had been rented as a doctor's office for many years and was temporarily exempt from rent stabilization on the base date four years before tenant's complaint was filed. The DRA ruled for tenant, finding that the legal rent was $1,800 when tenant moved in. The DRA also froze tenant's rent at $1,800 because landlord didn't file proper rent registrations from 2005 to 2007. Landlord was ordered to refund $2,042 to tenant. Landlord appealed.
The DHCR ruled for landlord. Under Rent Stabilization Code Section 2526.1(a)(3)(iii), if an apartment is vacant or temporarily exempt on the base date, the legal regulated rent is the rent agreed to by landlord and the first tenant to move in after that. It is undisputed that tenant's apartment was temporarily exempt on the base date. The rent agreed to between landlord and tenant was $2,042. Nothing in the code barred landlord from giving tenant a preferential rent under these circumstances. And since the legal regulated rent was over $2,000, the apartment was deregulated.

Forest Royale Associates: DHCR Adm. Rev. Docket No. WC110015RO (8/21/08) [2-pg. doc.]