Low Rent Supplement Permitted Based on Preferential Rent

Tenant complained of a rent overcharge. Landlord had given tenant a preferential rent. But when landlord renewed tenant's lease, landlord used the higher, legal rent as the base rent and charged tenant the legal rent, not the preferential rent. The DRA ruled for tenant, finding a $650 overcharge. The DRA found that the base rent for tenant's renewal lease should be the preferential rent, not the legal rent. Landlord appealed, claiming that it was entitled to charge the legal rent upon renewal based on a 2003 amendment to the Rent Stabilization Law. Alternatively, landlord claimed that it was entitled to a low rent supplement of $15 in addition to the guideline increase applied to the preferential rent. The DHCR ruled for landlord in part. Landlord and tenant, both represented by attorneys, had signed a prior court settlement agreement by which landlord agreed to renew tenant's lease based on the preferential rent. This agreement was binding even after the law changed. So landlord was required to continue to base tenant's rent increases on the preferential rent. However, since tenant's last preferential rent was $450, landlord was entitled under Rent Guidelines Board Order 32 to add a $15 low rent supplement. This supplement applied to base rents under $500 per month. There was no rent overcharge.

Ping On Realty Corp.: DHCR Adm. Rev. Dckt. No. SJ410053RO (12/9/04) [4-pg. doc.]