Landlord Committed Fraud and Must Refund $377,000

Tenant complained of rent overcharge. The DRA ruled against tenant because the base date rent in June 2004 was $3,200 and tenant therefore was exempt from rent stabilization based on high-rent deregulation. Tenant appealed and claimed that the DRA improperly applied the four-year rule despite evidence of fraud. The DHCR again ruled against tenant, who then filed an Article 78 court appeal. The case was sent back to the DHCR for reconsideration in light of the ruling by New York's highest court in the case of Grimm v. DHCR. Landlord tried to block the remand, but the court ruled that was premature. The DRA then found that there was a fraudulent scheme by landlord to deregulate the apartment.

Landlord appealed and lost. Tenant claimed that landlord's buyout of a prior tenant was fraudulent but that wasn't relevant. What mattered was that landlord couldn't prove that the next two people named as tenants after the prior tenant buyout ever had a lease or paid rent. At most, they were subtenants of the prior tenant and moved out in connection with the prior tenant buyout. The DRA also properly found that apartment improvements were done while the apartment was occupied and without the written consent from the tenant in occupancy. So no rent increase was permissible for IAIs. Apartment registration records for 2002 also indicated fraud. The apartment was registered that year as exempt due to high-rent vacancy. The 2001 rent was registered as $1,950. But this was more than the rent stated in prior tenant's lease and there was no other proof that this was the amount of rent paid. The DHCR ordered landlord to refund a total overcharge of $377,000, including interest and triple damages. 

Golden Horse Realty, Inc.: DHCR Adm. Rev. Docket No. BX410027RO (11/13/14) [1-pg. doc.]