Landlord Discontinued Preferential Rent in Error

Rent-stabilized tenant complained of rent overcharge. The DRA ruled against tenant, who appealed and lost. Landlord had incorrectly discontinued a preferential rent agreed to in tenant’s initial lease. The base date rent was $2,420 and, while the case was pending, landlord had refunded $32,000 to tenant, lowered tenant’s rent, and offered a renewal lease with a preferential rent. Tenant claimed that the base date rent should be $1,514, which was the preferential rent in 2004, based on landlord’s failure to register the apartment. Tenant also argued that landlord’s discontinuation of the preferential rent after 12 years was fraudulent.

The DHCR found that Rent Stabilization Code Section 2526.1(a)(2)(viii) permitted review of the rent history before the four-year period preceding the filing of the complaint for the limited purpose of determining the existence of a preferential rent. But the code section governing determination of whether there was a fraudulent scheme to deregulate the apartment didn’t apply. While landlord erroneously discontinued tenant’s preferential rent in 2004, it did so understandably based on 2003 Rent Stabilization Law amendments. There was no scheme to deregulate the apartment. And landlord had registered the apartment at all times.

Hartman: DHCR Adm. Rev. Docket No. ER410059RT (2/23/17) [4-pg. doc.]