Pre-2014 Version of RSC Preferential Rent Provision Applied to Overcharge Claim

Rent-stabilized tenant complained of rent overcharge. The DRA ruled for tenant and reduced his rent, finding that a preferential rent was tenant's legal rent because landlord failed to preserve a higher legal rent in tenant's lease. Landlord appealed and lost, then filed an Article 78 court petition arguing that the DHCR's decision was arbitrary and unreasonable.

The court sent the case back to DHCR for further consideration, and the DHCR then ruled for landlord. The DRA had ruled against landlord in September 2016 and applied the Rent Stabilization Code (RSC) as amended in January 2014. But the first lease at issue in this case was signed in 2009. The court ruled that the RSC in effect in 2009 should be applied to the case. That code provision stated that "where the amount of the legal regulated rent is set forth in a vacancy or renewal lease where a preferential rent is charged, the amount of the legal regulated rent shall not be required to be set forth in any subsequent renewal of such lease." Since landlord had preserved the higher legal regulated rent in tenant's vacancy lease, which also was the base date lease, the higher legal regulated rent was preserved, there was no overcharge, and tenant's renewal leases were proper.

5530-5572 Netherland Avenue LLC: DHCR Adm Rev. Docket No. GW610005RP (12/6/18) [3-pg. doc.]