Landlord Improperly Set First Deregulated Rent

Landlord sued to evict month-to-month tenant, who had remained in occupancy after his lease and several renewal leases expired. Landlord claimed that the apartment was unregulated either because the apartment’s monthly vacancy rent was $2,000 following a vacancy after April 1, 1994, or because landlord was entitled to charge a “first rent” in excess of $2,000 in 2004 after an extended temporary exemption from rent stabilization. Tenant claimed that the apartment was improperly deregulated. Tenant moved into the apartment on May 1, 2005. His lease stated that the unregulated rent was $2,000, and landlord gave tenant a preferential rent of $950. Before that, the apartment was occupied by landlord’s employee and was temporarily exempt from regulation between 1999 and 2004. Before the temporary exemption, the apartment was rent stabilized at a monthly rent of $792.

Rent Stabilization Code Section 2526.1(a)(3)(iii) states that if an apartment is vacant or temporarily exempt on the base date, the legal regulated rent is the first rent agreed to by a landlord and tenant following that vacancy or temporary exemption period. But the law is clear that this first rent must be “regulated.” Otherwise, landlords can create a loophole by making apartments vacant or employee-occupied for short periods. The court dismissed landlord’s eviction claim and granted tenant pretrial questioning for production of documents needed to determine the proper rent-stabilized rent and default formula for calculating rent overcharges and triple damages.

M&E Christopher LLC v. Godfrey: 47 Misc.3d 1230(A), 2015 NY Slip Op 50897(U) (Civ. Ct. NY; 6/15/15; Wendt, J)