Pre-Base Date IAIs Sufficiently Documented and Didn't Show Rent Fraud

Rent-stabilized tenant complained of rent overcharge in early 2019. The DRA found that the four-year base date rent of $2,050 per month was legal but froze that rent based on landlord's failure to file annual rent registrations. The DRA ruled for tenant and found a total rent overcharge of $2,713 which was far less than the $82,000 in back rent that tenant owed to landlord. So no refund was ordered.

Tenant appealed and lost. Tenant claimed that landlord committed fraud and that the DRA therefore should have looked back more than four years to establish the lawful base date rent.

But the DHCR found insufficient evidence of a fraudulent scheme to deregulate the apartment. Although landlord had failed to register the apartment since 2005, it never registered the unit as deregulated, and there was nothing showing that landlord ever charged a monthly rent exceeding the deregulation threshold. Landlord also provided sufficient proof to explain the rent increase collected prior to the base date. Landlord performed IAIs costing $70,000 in 1996 and $30,000 in 2003, long before the 2015 base date. Landlord submitted some proof of these IAIs in the form of supplier's invoices, proposals, and a construction contract. The DHCR found that this proof was sufficient since many years had passed since the IAIs were done and since the standard of proof required for IAIs at that time was lower than the proof required since the base date. New York's highest court also ruled in 2014 that the DHCR need not review every element of a landlord's entitlement to IAI rent increases taken before the base date to make a finding on the issue of potential owner fraud. And pre-base date IAIs are examined simply to see if fraud occurred. 

Elizabeth: DHCR Adm. Rev. Docket No. KT410011RT (2/8/23)[3-pg. document]