Rent Guideline Increases Applied to Calculate Legal Rent for Improperly Deregulated Unit

Tenant complained of rent overcharge and improper apartment deregulation. The DRA ruled for tenant and ordered landlord to refund $16,000, including triple damages and interest. Landlord had improperly deregulated the apartment while the building received J-51 tax benefits. Tenant appealed and lost. Tenant argued that the DRA incorrectly applied vacancy and renewal increases to determine tenant's legal rent but that, instead, the DRA should have used the default formula to set tenant's rent. The DHCR noted that landlord improperly deregulated the apartment in 2006 based on high-rent vacancy deregulation while the building received J-51 tax benefits but prior to the Court of Appeals ruling in Roberts v. Tishman Speyer Properties, LP. The Roberts decision was contrary to prior DHCR policy permitting such deregulation. Because none of the exceptions cited in Rent Stabilization Code Section 2526.1 applied in this case, pre-base date rent history couldn't be examined, and landlord submitted sufficient proof of the base date rent. So the DRA correctly set the rent of $1,827 per month charged and paid on the base date as the legal base date rent. Since landlord relied on pre-Roberts DHCR policy to deregulate the apartment, guideline rent increases were permissible. 

Garces: DHCR Adm. Rev. Docket No. FS410004RP (3/21/18) [5-pg. doc.]