Legal Rent of Apartment Calculated as Average of Comparable Rents

Tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $22,365, including interest. The DRA found that, since the apartment was temporarily exempt on the base rent date, tenant's legal regulated rent was determined by averaging the monthly rents of all comparable apartments in the same building, as listed in 2013 rent registrations, and adding to that average rent the vacancy increase applicable to the tenant's 2013 vacancy lease. The result was a legal regulated rent of $1,540.

Landlord appealed and lost. Landlord argued that it was entitled to set a first rent when tenant moved in after the temporary exemption. But, since tenant's complaint was filed on Feb. 28, 2014, and since  Rent Stabilization Code (RSC) 2526.1(a)(3)(iii) was amended effective Jan. 8, 2014, the legal rent was properly calculated. RSC Section 2526.1(a)(3)(iii) fails to address the situation here, where there was no legal regulated rent immediately prior to the base date. So, the DRA had the authority under RSC Section 2522.6(a) to fix the prior legal regulated rent by averaging the rents of comparable apartments. The DRA didn't apply the more punitive default procedure to set tenant's rent. The DHCR also denied tenant's PAR seeking triple damages. Landlord reasonably relied on the prior version of RSC Section 2526.1(a)(3)(iii), and therefore the overcharge wasn't willful. 

Bradbury/AEJ 534 East 88th LLC: DHCR Adm. Rev. Docket Nos. DV410037RT, DU410039RO (3/1/17) [8-pg. doc.]