Overcharge Resulted from Base Date Rent Freeze for Failure to Register

Tenant complained of rent overcharge and improper deregulation of her apartment. Tenant moved into the unit on June 1, 2016, under a non-stabilized lease at a rent of $2,500 per month. Landlord had registered the apartment as exempt from rent stabilization since 2011. Landlord argued that the unit was deregulated in 2010 following a vacancy and individual apartment improvements (IAIs) that resulted in a rent increase to $2,456.53 per month. Although the DRA requested proof of the IAIs landlord claimed were performed, landlord argued that it wasn't required to produce records predating the four-year base date in 2013.

The DRA ruled for tenant and reduced the base date rent to $2,150 based on a vacancy lease for a prior tenant, then froze the collectible rent for failure to register the apartment. The DRA directed landlord to refund $34,500, including triple damages.

Landlord appealed and won, in part. The DRA correctly reduced tenant's rent based on landlord's failure to submit proof of pre-base date IAIs. Prior to the enactment of HSTPA in 2019 and the 2020 Court of Appeals ruling in Regina Metropolitan v. DHCR, the DHCR already was permitted to review rental events prior to the base date to determine whether an apartment was subject to rent stabilization. This was true even if there was no proof of a colorable claim of fraud. However, because the resulting rent overcharge was based solely on the rent freeze resulting from landlord's failure to register the apartment found to be rent stabilized, triple damages didn't apply under RSC Section 2526.1(a)(1). The total overcharge refund was reduced to $16,947.

PWV Acquisition Owner, LLC: DHCR Adm. Rev. Docket No. KV410026RO (1/31/23)[4-pg. document]