No Indication Found of Fraudulent Scheme to Deregulate Apartment

Tenant complained of rent overcharge and improper deregulation of his apartment. The DRA ruled against tenant, finding that the apartment was high-rent vacancy-deregulated in 2000. Tenant appealed, based on a number of arguments that challenged the apartment deregulation.

The DHCR ruled against tenant. The DHCR found no reason to investigate pre-base date rental events since there was insufficient indicia of a fraudulent scheme to deregulate the apartment. The alleged unexplained rent increase in 1987 didn't rise to the level of a scheme to deregulate. Since there was no high-rent vacancy deregulation provision in the Rent Stabilization Code at that time, this rent jump couldn't have been part of any fraudulent scheme to deregulate.

Another unexplained rent increase in 1993 following a fire, with a resulting rent increase that was several hundred dollars less than the $2,000 deregulation threshold, also didn't indicate a fraudulent scheme.

In April 2000, the apartment's registered rent properly exceeded the $2,000 deregulation threshold based solely on the applicable vacancy increase at that time. Landlord incorrectly continued to register the apartment as rent stabilized for several years. But the fact that landlord properly registered the unit from 1987 to 2000, and the incorrect registrations for two years after the apartment actually became permanently exempt, all showed that landlord was acting in good faith and that there was no fraud concerning the rent. In addition, there was no need to investigate a prior rent reduction order that exempted tenant's apartment, or any claimed preferential rents occurring 19 years ago or earlier. 

Gilbert: DHCR Adm. Rev. Docket No. HW210013RT (1/28/21) [9-pg. doc.]