Leases Submitted by Receiver Found Fraudulent by DHCR

Tenant complained of rent overcharge in 2012. His current rent was $2,200 per month and he claimed that the apartment had been fraudulently deregulated. The building had been the subject of a foreclosure action and a receiver was appointed in September 2011. The receiver argued that the  apartment was deregulated in June 2008 when a prior tenant moved into the apartment at $2,600 per month. A later prior tenant also signed a vacancy lease in 2010 at $2,200 per month. And the receiver filed a 2012 rent registration listing the apartment as permanently exempt. Tenant claimed the receiver's records were fraudulent. In 2013, the landlord responded to the complaint, claiming that the building had not been foreclosed upon.

The DRA issued a triple damages notice to landlord, which stated that the rent would be calculated using the default method and indicated that the DRA was relying on the Grimm case. Later, the DRA ruled for tenant based on landlord's failure to submit leases predating the base rent date as requested. Landlord was ordered to refund $28,000, including triple damages. Landlord appealed and lost. Landlord received sufficient notice from the DRA of the rent history documents sought and the possibility of triple damages. The DRA also correctly applied the default formula after rejecting the 2008 and 2010 leases submitted by the receiver. These leases didn't have set terms of one or two years and merely established month-to-month tenancies. Since this was contradictory, the DRA properly disregarded the leases. 

135 West 13th LLC: DHCR Adm. Rev. Docket No. CR410032RO (1/26/15) [8-pg. doc.]