Landlord Preserved Tenant's Legal Regulated Rent and Preferential Rent

Tenant moved into an apartment in 2004 under a legally deregulated lease. But in 2005, the building received J-51 tax benefits. While landlord continued to treat tenant's unit as deregulated, this was incorrect as determined in 2009 by New York's highest court in Roberts v. Tishman Speyer Properties. In November 2014, tenant complained of rent overcharge. Landlord admitted that tenant was rent stabilized but argued that tenant paid a preferential rent.

The DRA ruled for tenant and found that the base date rent in November 2010 was $1,530. The DRA found no actual overcharge. Landlord appealed and argued that the legal regulated rent was $2,725, not $1,530. The DHCR ruled against landlord, who then filed an Article 78 court appeal. The DHCR agreed to take the case back for further consideration.

The DHCR then ruled for landlord. The apartment was lawfully deregulated in 2004 when the legal rent was $2,229. So, the $1,200 rent stated in tenant's 2004 vacancy lease wasn't a preferential rent because "preferential rents are the product of rent stabilization." Landlord treated the apartment as deregulated from 2005-2010 under the DHCR's former interpretation of the law. Landlord immediately complied with the 2009 Roberts decision and offered tenant a rent-stabilized lease at a legal rent of $2,725 and a preferential rent of $1,530. The base date renewal lease preserved the legal regulated rent and preferential rent. Amendments to the Rent Stabilization Code in 2014 applied because the 2010 renewal lease predated those amendments.

Sixth Lenox Terrace Assoc.: DHCR Adm. Rev. Docket No. GN410006RP (2/18/20) [6-pg. doc.]