Overcharge Results After High-Income Deregulation Voided

Landlord asked the DHCR to set a lawful rent for tenant's apartment. Landlord showed that a DRA order issued in November 2007 deregulated the apartment based on high-income rent deregulation. That ruling was later revoked by another DHCR order issued in September 2011. Tenant paid $2,344 in monthly rent in May 2007 and later signed a destabilized renewal lease for an unregulated rent of $2,700 in 2009. Landlord argued that the DRA should allow rent increases for deemed renewal leases starting Sept. 1, 2009. The DRA disregarded the destabilized lease rent but allowed renewal increases at rent guideline percentages for 2009 and 2011 renewals. The 2011 renewal rent was $2,647.

Landlord appealed and lost. Among other things, landlord claimed that it was unclear whether the now voided deregulated lease was legal for purposes of the rent collected at the time. The DHCR ruled against landlord. Because the 2007 deregulation order was later revoked, the legal rent increases for the apartment could only be the rent-stabilized rents as deemed by the DHCR. Collection of $2,700 per month under the now void deregulated lease constituted a rent overcharge.

BLDG Management Co., Inc.: DHCR Adm. Rev. Docket No. BS410024RO (12/20/13) [3-pg. doc.]