No Rent Overcharge Found After Reconsideration

Tenant complained of rent overcharge. The DRA ruled for tenant, finding that landlord owed tenant $7,453 plus interest. Since landlord already had refunded $9,189 to tenant, the DRA found that no further refund was due. Landlord appealed, and the DHCR ruled that the DRA had incorrectly reduced the legal rent by $17.88 pursuant to an MCI Modification Order. Landlord then filed an Article 78 court appeal, and the case was sent back to the DHCR for further consideration.

The DHCR ruled for landlord. In 2014, the Civil Court had ruled in a housing court case that the discounted rent landlord charged tenant was a preferential rent. The only remaining issue therefore was whether the preferential rent was greater than the legal regulated rent. The base date rent in this case was unreliable because the apartment had been incorrectly deregulated while landlord received J-51 tax benefits. So the base date rent must be set using the last legal regulated rent on record prior to the erroneous deregulation, and increased by allowable and appropriate guideline increases. So, the DHCR took the last registered rent-stabilized rent of $1,695 and preferential rent of $1,423 from a 2005 lease, added allowable MCI rent increases and permissible subsequent vacancy increase and guideline increases. With all increases added, the June 2014 legal rent was $2,324 and the preferential rent was $1,936. Since tenants never paid more than the determined legal regulated rent, there was no overcharge.

Hillside Place, LLC: DHCR Adm. Rev. Docket No. EU110003RP (6/21/17) [5-pg. doc.]