Overcharge Lookback Period Limited to Four Years

Tenant complained of improper apartment deregulation and rent overcharge. She claimed that landlord improperly claimed excessive costs for individual apartment improvements (IAIs) in its Notice of Deregulation when she moved in. The DRA ruled for tenant in 2016, found tenant was rent stabilized, and directed landlord to refund $30,387, including triple damages. The DRA's decision was based on landlord's failure to prove that tenant's rent was a preferential rent.

Tenant appealed and argued that the DRA should have used the DHCR's default method to set the lawful rent because of a fraudulent scheme to deregulate the apartment. Landlord claimed that it spent $110,000 on apartment IAIs, but DOB records were inconsistent, showing for example that landlord spent $38,250 to remove and install joist beams in the apartment ceiling.

The DHCR ruled against tenant, who then filed an Article 78 court appeal. The court ruled against tenant, who then asked to reargue after June 14, 2019, based on changes to  the lookback period of rent overcharge provisions of the Rent Stabilization Law under HSTPA. The court then sent the case back to the DHCR for reconsideration.

But, in Regina Metro. Co. v. DHCR, New York's highest court later ruled in April 2020 that changes to the lookback period under HSTPA couldn't be applied retroactively. And, in this case, there was insufficient indicia of fraud. Landlord presented sufficient proof, including a contractor's invoice, affidavit, and proof of payment, to show a basis for the pre-base-date rent increase. Lower cost estimates submitted to DOB or other agencies need not be considered when evaluating IAIs. The lack of rent registration history also didn't mean that landlord engaged in fraud. The Notice of Deregulation given to tenant when she moved in gave her notice of the prior lower rent and the IAIs. 

Carter: DHCR Adm. Rev. Docket No. IS210072RK (8/11/20) [6-pg. doc.]