Improper Deregulation While Building Got J-51 Benefits Didn't Warrant Using Default Formula

Unregulated tenants complained of improper deregulation and rent overcharge. New landlord agreed that tenants were rent stabilized and gave them a rent-stabilized lease and a rent refund. The DRA ruled for tenants and ordered landlord to refund $219, including interest and minus the refund already made to tenants.

Tenants appealed and lost. Tenants claimed that the DHCR should have used its default formula to set the base date rent. Rent Stabilization Code Section 2522.6 states that the default formula should be used to set the base rent: (a) when the base date rent can't be determined; (b) if a full rent history from the base date hasn't been provided; (c) when the base date rent is the product of a fraudulent scheme to deregulate the apartment; or (d) where landlord has engaged in a prohibited rental practice. In this case, landlord documented a full rent history and there was no fraudulent scheme or proscribed rental practices shown. Prior landlord had deregulated the apartment while receiving J-51 tax benefits, but prior to the Court of Appeals decision in the Roberts case, at a time when DHCR policy permitted such deregulation. Landlord also refunded most of the rent overcharge in a timely manner in response to tenants' complaint. 

Kudelska/Kopczynski: DHCR Adm. Rev. Docket No. GT410012RT (6/19/19) [8-pg. doc.]