First Rent Restored After 1988 Harassment Order Rescinded

Facts: Tenant moved into an apartment in 1994 at a deregulated rent of $1,400 per month. Landlord believed the apartment was exempt due to substantial rehabilitation of the building. In a prior case, the housing court ruled that the building didn't qualify as substantially rehabbed but that landlord was entitled to charge tenant $1,400 as a first rent in 1989 for a newly created duplex apartment. But in 2003, an appeals court ruled that landlord couldn't collect the first rent due to an outstanding DHCR harassment order that froze tenant's rent at $138 per month. In 2008, the DHCR revoked the harassment finding and "prospectively eliminated" all sanctions. Landlord later sued to evict tenant for nonpayment of rent at $1,400 per month. Tenant claimed a rent overcharge. The court ruled for tenant, finding that landlord could increase tenant's rent based only on $138, not $1,400. Landlord appealed. Court: Landlord wins. Landlord was entitled to a first rent of $1,400 in 1989. Although the renovations leading to the creation of the new apartment took place when the rent was frozen by the harassment order, once the DHCR revoked this order and prospectively eliminated all sanctions, landlord was entitled to collect the 1989 first rent. Tenant argued that the four-year rule should apply to bar consideration of the 1989 renovations. But landlord was under a continuing duty not to increase tenant's rent until the harassment finding was removed. Following the Court of Appeals' ruling in Cintron v. Calogero, consideration of the DHCR's revocation of a 19-year-old harassment order doesn't violate the four-year rule.

446-450 Realty Co., LP v. Higbie: 2010 NY Slip Op 20528, 2010 WL 5468906 (App. T. 1 Dept.; McKeon, PJ, Schoenfeld, Shulman, JJ)