No Fraud and No Rent Overcharge in Case Involving Preferential Rent

Rent-stabilized tenant complained of rent overcharge, claiming that there were missing rent registrations and a substantial rent hike during her tenancy. The DRA ruled against tenant, finding that tenant's base date rent was $1,886, that tenant had refused to sign a subsequent renewal lease offer, that tenant's rent hadn't increased, and that there was no overcharge.

Tenant appealed and lost. Tenant now claimed fraud and said the DRA should have pierced the four-year time limit on overcharge claims because there was an inexplicable 125 percent rent increase between 2006 and 2008, the rent registration history was full of omissions and irregularities, and tenant's initial lease included a preferential rent that should have been offered at all times during tenant's occupancy. The DHCR wouldn't accept tenant's fraud claim because it wasn't raised before the DRA. And, in any event, there was no indication of fraud in this case. Here, the apartment was registered as rent stabilized since 1986, tenant's leases were all rent stabilized, and the rent increases were justified by rent guidelines and preferential rents. And claimed improper rent increases taken many years before the base date and that didn't bring the apartment rent near the statutory decontrol threshold can't be part of a fraudulent scheme to deregulate the apartment.

The DHCR noted that the DRA did go back more than four years to look at tenant's vacancy and renewal leases in order to review tenant's preferential rent history. The DRA also reviewed the existence of a preferential rent in tenant's vacancy lease by looking at the registered rent of the apartment prior to tenant's vacancy lease. The DRA properly applied Rent Stabilization Code Section 2526.1(a)(2)(viii) by reviewing pre-base date rent history and finding that landlord had preserved a higher legal regulated rent that could be charged upon lease renewal. 

Antoine: DHCR Adm. Rev. Docket No. FO210060RT (2/26/18) [5-pg. doc.]