Landlord Waived Vacancy Increase by Charging Lower Rent

Tenant complained of rent overcharge. Landlord claimed that the apartment was deregulated. The DRA ruled for tenant. Landlord appealed and lost. Tenant moved into the apartment on Feb. 1, 2015, at a monthly rent of $1,750. The prior tenant's last rent had been $2,187.60. Landlord could have charged tenant a 5 percent vacancy increase when she moved in. But since landlord charged tenant less than what the prior tenant paid, it waived the right to collect more than $1,750. Landlord argued that because the $2,187.60 rent charged to prior tenant was subject to an 18.25 percent vacancy increase when that tenant moved out, the resulting rent could have been $2,500 per month and therefore the apartment was vacancy deregulated as a matter of law. But prior tenant paid a preferential rent. Under the Rent Act of 2015, the permissible vacancy increase when prior tenant moved out was 5 percent, not 18.25 percent. And since $1,750 was the only rent stated in tenant's vacancy lease, that became the legal regulated rent.

Owl Creek Properties, LLC: DHCR Adm. Rev. Docket No. HO610017RO (10/24/19) [2-pg. doc.]