No First Rent in Apartment Reconfigured After Fire

Facts: Rent-stabilized tenant was forced to move out of her apartment in 1997 due to a fire in the building. Her monthly rent at that time was $430. The DHCR reduced tenant's rent to $1.00 per month while landlord made extensive repairs to the building. Landlord increased the number of apartments per floor from six to eight. Without notifying tenant, landlord reduced the size of her apartment and took away 1,000 square feet by moving a wall and reducing the number of bedrooms from four to two, reducing the size of the kitchen and living room, and providing two fewer windows. Two years later, tenant moved back into the reconfigured apartment at a monthly rent of $750. Tenant complained of a rent overcharge. The DHCR ruled against tenant, finding that landlord was entitled to charge tenant a first rent for a newly created apartment. Tenant appealed. Court: Tenant wins. The DHCR's decision was arbitrary, unreasonable and irrational. One DHCR policy permitted tenant to hold on to her tenancy by continuing to pay landlord $1.00 per month while her apartment is uninhabitable through no fault of her own. Yet the DHCR relied on another policy to permit a substantial increase in tenant's rent for a reconfigured apartment with much less space. This was not a case of a first rent being charged for a vacant apartment. Tenant maintained a connection with the apartment by paying the reduced rent throughout the period that the apartment was uninhabitable due to fire damage.

Fernandez v. DHCR: NYLJ, 7/24/02, p. 19, col. 3 (Sup. Ct. NY Co.; James, J)