Landlord Properly Set First Deregulated Rent After Commercial Use

Unregulated tenant complained to the DHCR of improper deregulation and rent overcharge. The DRA ruled against tenant, who appealed and lost. Tenant moved into the apartment in January 2018 at an initial rent of $3,800 per month. Landlord pointed out that prior residential tenant paid first rent of $3,500 per month in March 2008. Before that, the unit was a commercial space. The DRA correctly ruled that the premises went from commercial use to residential use in 2008 and the first residential rent for the unit was more than $2,000. So, landlord was entitled to charge the first tenants a non-stabilized rent. Tenant argued that the first residential rent had to be rent stabilized. But that rule only applied to an apartment that was vacant or temporarily exempt and not one where a first rent is set following commercial use. The fact that landlord registered the premises with the DHCR in 1984 and 1985 as rent stabilized didn't matter. Rent history records showed that the unit was occupied by a commercial tenant from 1980 to 2007; the mistaken filing of a rent-stabilized registration in 1984/1985 didn't confer rent-stabilized status on the unit at that time. Such a mistake was understandable during the initial registration periods. There was no indication of any fraudulent scheme to deregulate the apartment.  

Diamond: DHCR Adm. Rev. Docket No. HM410007RT (3/29/19) [3-pg. doc.]