Landlord Deregulated Apartment Under Prior Rule Permitting Deregulation After Owner Occupancy

(Decision submitted by Karen Schwartz-Sidrane, Esq. of the Rockville Centre law firm of Sidrane & Schwartz-Sidrane, LLP, attorneys for the landlord.)

Tenant complained of rent overcharge and claimed that her apartment had been wrongfully deregulated. She said that the apartment was owner-occupied before she moved in. The DRA ruled for tenant, finding that the total overcharge with interest was $8,500 and that the overcharge wasn't willful.

Tenant and landlord both appealed. Tenant claimed that there had been fraud and that the DHCR should therefore have looked at pre-base date rent history. But landlord showed that the apartment was owner-occupied between 2002 and 2006. A new tenant moved into the apartment in 2006. At that time, Rent Stabilization Code (RSC) Section 2526.1(a)(3)(iii) permitted landlord to set a deregulated rent for the first tenant to move in after owner occupancy. This provision was amended in 2014 to require retroactively bridging the gap to set the legal rent. But, since landlord complied with the prior RSC then in effect, there was no fraud.

In addition, since the housing court had found, in a prior proceeding, that the apartment's rent was $1,200 on the apartment's base date in the DHCR proceeding, the DHCR must accept that finding in setting the base date rent. The DHCR otherwise modified the overcharge finding, based on landlord's showing that tenant didn't pay one month's rent.

Reguera/Torrico: DHCR Adm. Rev. Docket Nos. FT210023RT, FT210043RO (9/14/18) [11-pg. doc.]