First Rent Collected in Building That Became Stabilized Was the Legal Regulated Rent

Tenant complained to the DHCR of lease violation and rent overcharge in separate complaints consolidated by the DRA. Landlord had never given tenant a lease. Landlord claimed that the apartment was unregulated. The DRA ruled for tenant, finding that the apartment was rent stabilized and that there was a total rent overcharge, with triple damages and interest, of $3,953. But the DRA also found that the overcharge was offset by $11,120 in rent underpayment. The DRA also directed landlord to give tenant a vacancy lease at a monthly rent of $1,100.

Tenant appealed and lost. Tenant argued that the base date rent was unreliable and that landlord engaged in a fraudulent scheme to deregulate the apartment. Therefore, the DHCR should apply the default formula and find a greater overcharge. The DHCR disagreed, finding no proof of a fraudulent scheme to deregulate the apartment. Based on an illegal conversion from four to eight units, the apartment was rent stabilized. Since the apartment became rent stabilized due to the landlord illegally renting cellar apartments, raising the number of rental units to six or more, and given that the apartment had no prior rental history in the rent stabilization system, there was no grounds to invalidate the initial rent paid by tenant. Landlord also had already filed amended registrations as directed by the DRA.

Bobb-Hoyte: DHCR Adm. Rev. Docket Nos. GX210027RT/GX20031RT (6/14/19) [3-pg. doc.]