No Fraud and No Overcharge Found in Case Involving J-51 Building

Rent-stabilized tenant complained of rent overcharge. The DRA ruled against tenant, finding no overcharge since the base rent date four years prior to the date tenant filed his complaint. Tenant appealed and lost. Tenant claimed that the DRA should have looked back more than four years to determine whether there was a fraudulent scheme to deregulate the apartment. It was undisputed that the building received J-51 tax benefits. Landlord had argued that, before New York's highest court ruled in Roberts v. Tishman Speyer Properties in 2009 that buildings under J-51 were exempt from high-rent deregulation, prior landlord relied on the DHCR's contrary interpretation of the law. The DHCR found that landlord's prior deregulation of the apartment therefore wasn't an indicator of fraud. And the combination of factors that may lead to a finding of fraud cited by New York's highest court in the case of Grimm v. DHCR (2010) weren't present in this case. Also, in its answer to the complaint, landlord pointed out that, after Roberts and some later cases that clarified the effect of that ruling, landlord re-established the apartment as rent stabilized and that tenant had been offered rent-stabilized leases. 

Hall: DHCR Adm. Rev. Dckt. No. FQ210034RT (2/15/18) [5-pg. doc.]