Preferential Rent Limited to Tenant's First Lease

(Decision submitted by Patrick K. Munson of the Manhattan law firm of Kucker & Bruh, LLP, attorneys for the landlord.) Facts: Landlord gave rent-stabilized tenant a preferential rent when he moved into the apartment in 1996. Tenant's lease contained a rider stating that he was getting the preferential rent during the two-year lease term due to the ``present economically depressed market.'' Landlord offered tenant a renewal lease in 1998 at the full, legal, regulated rent. Tenant refused to sign the renewal lease and complained to the DHCR that he was entitled to a continuation of the preferential rent. The DHCR ruled for tenant, and landlord appealed, claiming that this was arbitrary and unreasonable. The court ruled against landlord, and landlord again appealed. Court: Landlord wins. Rent Stabilization Code Section 2521.2(b) permits a landlord who has charged a tenant a preferential rent to raise the rent to the legal regulated rent for the next tenant. But landlord still can raise the rent to the legal regulated rent for the same tenant when the preferential rent clause in tenant's lease applies only to that lease and not to any lease renewals. The DHCR's interpretation of the regulation was unreasonable.

Missionary Sisters of the Sacred Heart v. DHCR: NYLJ, 5/29/01, p. 22, col. 1 (App. Div.1 Dept.; Nardelli, JP, Williams, Ellerin, Lerner, Rubin, JJ)