Rent Overcharge Determined Under Default Formula Using DHCR Sampling Method

Tenant complained to the DHCR in 2017 of rent overcharge and improper apartment deregulation. The DRA ruled for tenant, finding that the apartment was rent stabilized. Due to landlord's failure to submit a lease and/or rent ledger in effect on the base date, the DRA computed the base-date rent using the default method allowing the rent to be set using data compiled by the DHCR via sampling methods. The DRA utilized the average rent for the same size regulated apartments in the same ZIP code. The total refund due to tenant, with interest and triple damages was $28,205.

Landlord appealed and lost. The DHCR noted that, as established by appellate case law, the agency could look past the four-year lookback period to determine the rent regulatory status of the apartment. The DRA also correctly applied RSC Section 2526.1(a)(3)(iii) to calculate the rent history, which included a period of temporary exemption from rent stabilization. The first rent set after the temporary exemption was subject to rent stabilization as a matter of law. The DRA also appropriately applied the default formula since landlord submitted to produce rent history records. And application of the default formula froze the rent from the base date and therefore didn't permit the addition of subsequent rent increases, including annual guideline increases and vacancy increases. In addition, no annual rent registrations had been filed for the apartment since 1998. 

341 W 19th Street Partners 2 LLC: DHCR Adm. Rev. Docket No. JN410031RO (8/26/21)[13-pg. document]