Preferential Rent Charged to First Tenant in 421-a Building Is Legal Base Rent

Rent-stabilized tenant in building receiving Real Property Tax Law Section 421-a tax benefits complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $4,200, including triple damages. Landlord appealed and lost. Tenant was the first tenant in the newly constructed building under a one-year lease commencing Sept. 15, 2013, that set forth a legal regulated rent of $4,230 and a preferential rent of $1,800. Rent Stabilization Code Section 2521.1(g) provides that the first legal rent for an apartment in a 421-a building is the initial adjusted rent charged and paid, which can't be higher than the rent approved by HPD for the apartment. So, the preferential rent charged to and paid by tenant was the legal regulated base date rent. Landlord argued that HPD permitted a higher initial rent for the apartment than the preferential rent charged and that the HPD-approved rent should be the legal rent. But landlord didn't submit proof of the HPD-approved rent to the DRA. And it didn't matter. The initial legal rent for the 421-a unit was the actual rent paid.

3052 Brighton First, LLC: DHCR Adm. Rev. Docket No. FO210057RO (2/27/18) [6-pg. doc.]