Landlord Entitled to Set New Rent After Base-Date Vacancy Occurring Before 2014

Rent-stabilized tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $10,000, including interest. Landlord appealed and won. The apartment had been vacant on the base date four years before tenant filed her complaint. The DRA calculated the base date rent by adding successive two-year guideline increases to the prior rent-stabilized rent to come up with a base date rent. Landlord argued that while amendment to Rent Stabilization Code (RSC) Section 2526.1(a)(3)(iii) in 2014 provided for such calculation, the amendment changed the way landlords had been previously permitted to set the legal regulated rent after a period of vacancy or temporary exemption from rent stabilization. Landlord claimed that it was unreasonable and incorrect to apply that new rule retroactively.

The DHCR agreed with landlord because a court had ruled in the case of AEJ 534 East 88th LLC v. DHCR that it wasn't the intent of the legislature to apply the amended RSC provision retroactively. Tenant filed her complaint on July 7, 2016. The apartment was vacant from May 2012 until October 2012 and therefore temporarily exempt from rent stabilization on the base rent date of July 7, 2012. Landlord therefore was entitled under the RSC provision in effect before January 2014 to charge tenant an agreed-upon first stabilized rent when she took occupancy in October 2012. The legal regulated rent was $1,100 per month when tenant moved in, and there was no overcharge.

Goldmont Realty Corp.: DHCR Adm. Rev. Docket No. GP210013RO (3/18/19) [3-pg. doc.]