Indications of Fraud Warranted Overcharge Finding

Rent-stabilized tenant complained of rent overcharge, fraud, and improper apartment deregulation before the base rent date. The DRA ruled for tenant and ordered landlord to refund $132,175, including interest and triple damages. The DRA also found fraud, stating that review of pre-base date records showed that registrations were filed late and/or amended, individual apartment improvements (IAIs) were backed up only by an affidavit, and leases submitted didn't correlate with the registrations. The DRA used the DHCR's default method to reduce and freeze the rent at $1,100.

Landlord appealed and argued that tenant presented no colorable claim of fraud. The DHCR ordered an apartment inspection, and landlord submitted proof of IAI costs, but the inspector found that certain improvements weren't made and the DHCR denied landlord's PAR. Landlord then filed an Article 78 court appeal. Landlord, tenant, and the DHCR agreed to send the case back to the DHCR for reconsideration.

The DHCR again ruled against landlord. Tenant submitted sufficient proof of fraud by landlord. The apartment rent was increased in 2001 from $430 to $1,300, tenant wasn't offered a rent-stabilized lease rider, the registered rents were different from lease rents at times, and amended registrations were filed six years after the claimed IAIs were done. Landlord failed to show that IAIs justified the 2001 rent increase. Landlord claimed that prior tenant signed a consent form for the IAIs, but DHCR inspections showed that many of the items listed in the consent weren't done. There also was no reason to conduct another DHCR inspection. 

Bergen Realty & Mgmt. LLC: DHCR Adm. Rev. Docket No. EP210003RP (9/6/17) [11-pg. doc.]