Landlord Must Continue Charging Preferential Rent

Facts: Tenant, who was landlord's son, moved into an apartment in 1977. His lease stated that the rent was $750 per month but that tenant would be charged $140 per month. Tenant married in 1983. In 1994, tenant moved out. He and his wife were divorced in 1999. She continued to live in the apartment with their child. She also continued to pay $140 per month in rent and was never given a renewal lease. In 2000, landlord's son asked his ex-wife to accept reduced child support payments in exchange for continuation of the low rent. The ex-wife refused. Landlord then sent the ex-wife a renewal lease offer for a one-year lease at a rent of $1,595 per month or a two-year lease at a rent of $1,625. The ex-wife filed complaints with the DHCR of rent overcharge and improper lease renewal. The DHCR ruled for the ex-wife, finding that her base rent for lease renewal was $140. Landlord challenged the DHCR's ruling in court. The court ruled for landlord, finding that the ex-wife had received a preferential rent that could be revoked. The DHCR appealed again. Court: The DHCR wins. The base date for determining the legal rent was four years before the ex-wife filed her rent overcharge complaint in 2000. Since the rent charged in 1996 was $140, this was the base rent for calculating any renewal increase. And even if the DHCR could consider the 1977 lease in determining the legal rent, that lease didn't contain a preferential rent rider or any other explanation of why tenant paid $140 per month at that time instead of $750.

AVJ Realty Corp. v. DHCR: NYLJ, 6/3/04, p. 25, col. 6 (App. Div. 1 Dept.; Nardelli, JP, Tom, Ellerin, Williams, Lerner, JJ)