Preferential Rent Charged to Tenant Was Initial Legal Regulated Rent

Tenant complained of rent overcharge. The DHCR ruled for tenant and ordered landlord to refund $34,826, including interest. Landlord then filed an Article 78 court appeal. The court sent the case back to the DHCR for reconsideration.

The apartment had been registered as owner-occupied and therefore temporarily exempt from rent stabilization between 1984 and 2010, when tenant moved in. Landlord also said that the apartment had been owner occupied since the 1940s and tenant therefore was the first rent-regulated tenant of the apartment. The prior owner submitted a sworn statement supporting this claim.

The DHCR found that tenant was the first rent-stabilized tenant of the unit. Landlord had given tenant a one-year lease commencing on April 1, 2010, which stated that the monthly legal rent was $2,000 per month and that the preferential rent was $1,800. Landlord therefore claimed that the apartment was deregulated. But the DHCR found that the $1,800 paid by tenant was the initial legal regulated rent, so the apartment was rent stabilized. The DHCR stated that, "The concept of the rent actually paid and collected being deemed a preferential rent is inconsistent with the establishment of an initial legal regulated rent or 'first rent'." In addition, because the rent actually paid has been established as the initial legal regulated rent, any claims by landlord concerning individual apartment improvements (IAIs) were irrelevant to determining the amount of the initial rent. There was a total overcharge of $1,120, including interest.

West 122 LLC: DHCR Adm. Rev. Docket No. FN410005RP (11/27/18) [4-pg. doc.]