No Rent Overcharge for Tenant in J-51 Building

Rent-stabilized tenant complained of rent overcharge. Under tenant's vacancy lease in April 2013, she was charged a legal monthly rent of $3,310 and a preferential rent of $2,830. Tenant claimed that the apartment was improperly deregulated while the building received J-51 tax benefits. Landlord admitted that the building began receiving J-51 tax benefits in 2009 and that tenant's lease contained a J-51 rider. The DRA ruled against tenant, finding no overcharge. Landlord had properly increased the June 2011 base date rent of $1,800 by a vacancy increase and an increase for individual apartment improvements (IAIs) costing $42,000 before tenant moved in.

Tenant appealed and lost. Tenant's legal regulated rent when she moved in was $3,300 and, since tenant paid a preferential rent, there was no overcharge. Landlord also submitted sufficient proof of IAIs and was entitled to a $700 rent increase for the improvements. And while landlord had registered the apartment as permanently exempt in 2007, landlord said that the rent at that time was more than $2,000 per month and the building hadn't started receiving J-51 benefits. Once under J-51 landlord resumed registration of the apartment as rent stabilized. 

Vedadi: DHCR Adm. Rev. Docket No. FQ410016RT (1/2/18) [4-pg. doc.]