Improperly Deregulated Apartment Remained Subject to Rent Stabilization

Tenant complained of rent overcharge and that her apartment was improperly deregulated while landlord received J-51 tax benefits. Tenant moved into the apartment in June 2013 at a monthly deregulated rent of $2,150. The lease contained a rider stating that the prior legal rent was $2,500. The DRA found that the apartment was rent stabilized but that there was no rent overcharge. On the base rent date the legal rent was $1,700, the rent paid by a prior tenant. Landlord failed to prove that the base date rent was preferential. Tenant's legal regulated rent in June 2013 was $2,150.

Landlord appealed, claiming that the apartment wasn't rent stabilized. The DHCR ruled against landlord, who then filed an Article 78 court appeal. Landlord agreed to the DHCR's request to send the case back for reconsideration. The DHCR found that, based on the erroneous deregulation of a J-51 apartment prior to the base date, the DRA should have gone back to the last legal regulated rent registered with the agency and calculated the subsequent rents leading up to the base date by applying Rent Stabilization Code Section 2526.1(a)(3)(iii). Recalculating the rent didn't change the finding that the apartment remained rent stabilized. For an apartment to qualify for deregulation where a preferential rent is being charged, the legal regulated rent must be established by record within four years before the preferential rent being charged and paid. Here, landlord never proved a legal regulated rent greater than the deregulation threshold. There was no proof of a preferential and higher legal regulated rent in the leases submitted by landlord. 

Fifth Lenox Terrace Associates: DHCR Adm. Rev. Docket No. FQ410008RP (9/20/17) [9-pg. doc.]