Landlord Can Include Income Surcharge in Initial Rent

Tenants in building previously regulated under the Private Housing Finance Law (PHFL) challenged their subsequent initial rent-stabilized rents. The DHCR ruled that tenant income surcharges should be included in tenants' initial regulated rents, while pool restoration charges should be excluded. Tenants appealed. The appeals court found that it was reasonable to include income surcharges. Under the rent stabilization law, where rents were previously regulated under PHFL, the initial legal registered rent is the rent charged to and paid by tenants on the date the prior regulation ends. Under PHFL regulations, the rent includes surcharges being assessed against tenant. Since various tenants were paying income-based surcharges as part of their rent on the date regulation under PHFL ended, it was proper for the DHCR to include those surcharges in tenants' initial regulated rents. On the other hand, the pool charges were authorized for the year 1986 only. Those charges weren't part of the rent authorized by the DHCR at the time PHFL regulation ended.

Brightwater Towers Associates v. DHCR: NYLJ, p. 30, col. 1 (2/21/95) (App. Div. 2 Dept.; Mangano, PJ, Sullivan, Balletta, Miller, JJ)