Landlord Can Collect Renewal Increase

Landlord sued to evict rent-stabilized tenants for nonprimary residence. Tenants failed to appear in court, but their subtenant appeared. He claimed that he moved into the apartment in 1997, that tenants were illusory, and that he was entitled to a rent-stabilized lease. Landlord and subtenant agreed that prime tenants were illusory and that subtenant was rent-stabilized tenant. But they couldn’t agree on tenant’s legal rent. Landlord argued that it should be allowed to recalculate tenant’s rent retroactively to 1997, when other tenant moved out. Tenant claimed that any recalculated rent was collectible prospectively only. And he said that landlord could go back only four years. He also argued that landlord should be allowed to take only a renewal increase over prior tenant’s last rent.
The court ruled for tenant. DHCR’s Fact Sheet # 7 states that the subtenant of an illusory tenant is entitled to a renewal lease at the lawful stabilized rent. Other courts have ruled that any rent increase that a landlord can collect from new tenant after illusory tenant is ousted is collectible going forward only. And the four-year rule bars examination of the rent history not just in overcharge cases but in a case like this to determine the legal rent. The current legal rent is $1,632. Landlord can offer tenant a renewal lease over this amount.