No Overcharge or Fraud Found to Trigger Review of Pre-Base Date Rent History

Rent-stabilized SRO tenant complained of rent overcharge and claimed that landlord acted in a fraudulent scheme to remove her unit from rent stabilization. The DRA ruled against tenant, finding no overcharge. Tenant appealed and lost. The base date rent charged to prior tenant was $1,000 per month. Landlord had never increased the rent above $1,000 since the base date, even though landlord could have been entitled to add guideline increases and other rent adjustments to the base rent based on vacancy or temporary exemption to rent stabilization before tenant's occupancy. And, although the four-year rent review period may be pierced to determine whether a fraudulent scheme to deregulate an apartment made the base date rent unreliable, there was no fraud found in this case. Unlike the Grimm case, tenant had no lease for the SRO unit, and therefore no lease purporting to be an unregulated lease. Tenant knew her unit was rent stabilized. The last registration for her unit was in 2004, with a monthly legal regulated rent of $461.66. Under Grimm, a possible impermissible rent increase before the base date, unaccompanied by other facts showing a fraudulent scheme to deregulate, is insufficient to make a fraud finding. And, although there was no unit registration between 2005 and 2013, there was no proof that landlord attempted to deregulate the tenancy of the prior rent-stabilized tenant. Also, unlike Grimm, tenant's rent was substantially below the statutory rent level for high-rent deregulation.

Martinez: DHCR Adm. Rev. Docket No. FM410060RT (9/1/17) [3-pg. doc.]