Landlord Improperly Discontinued Preferential Rent

Rent-stabilized tenant complained to the DHCR in April 2019 of improper deregulation of her apartment and rent overcharge. The DRA ruled for tenant, finding that the apartment was rent stabilized and that tenant's base date rent was $4,495 per month. The DRA directed landlord to refund $10,621, including interest.

Landlord appealed and lost. Landlord argued that tenant never promptly challenged the apartment's deregulated status. Landlord also claimed it properly discontinued a preferential rent under a lease clause provision when tenant failed to pay rent on time. The DHCR pointed out that there was no question that tenant was rent stabilized when she took occupancy in 2010 and throughout her tenancy based on landlord's receipt of J-51 tax benefits up to 2015. As held by New York's highest court in their 2010 decision in Roberts v. Tishman Speyer, the DHCR's prior contrary policy on this issue was incorrect. In addition, recent appeals court decisions have upheld DHCR rulings that on-time discount clauses are invalid, that such rents didn't constitute a preferential rent, and that the amount charged by a landlord, as set forth in the lease, becomes the legal regulated rent. And the RSL and RSC didn't permit landlord to raise a preferential rent during the term of an existing lease or tie the lower rent to an on-time payment. The DHCR was not retroactively applying new law in this case but merely affirming the state of the law as it had always been. 

81st Realty Corp.: DHCR Adm. Rev. Docket No. MN410020RO (4/15/24)[6-pg. document]