Landlord Properly Deregulated Apartment Before Tenant Moved In

Tenant complained of rent overcharge and improper deregulation of his apartment. The DRA ruled against tenant, finding that the monthly legal rent of $2,895 paid in 2014 by prior tenant exceeded the threshold for deregulation at that time. So the apartment was deregulated before the complaining tenant moved in and was no longer subject to rent stabilization.

Tenant appealed and lost. Since the complaint was filed before June 14, 2019, pre-HSTPA provisions of the Rent Stabilization Law concerning rent overcharge applied. The DHCR found no fraud in connection with individual apartment improvements (IAIs) done in 2006. For the purposes of determining whether there is an indication of landlord fraud, the DHCR need not investigate to determine if each item fully and properly qualifies for IAI rent increases under Policy Statement 90-10 but simply must review for the limited purpose of determining whether the IAIs and other factors surrounding the vacancy rent after the IAIs point to an owner scheme to fraudulently deregulate the apartment.

The DHCR inspection in 2019 also confirmed the 2014 IAIs, and landlord served the statutory notice of deregulation on the first tenants after the 2014 IAIs. This notice properly and accurately calculated the rent increases that brought the legal rent above the deregulation threshold. And permits, or lack of permits, wasn't relevant to whether work qualified as IAIs. 

Castillo: DHCR Adm. Rev. Docket No. IV410015RT (5/20/21) [6-pg. doc.]