Rent Overcharge Finding Unchanged 15 Years After Tenants Filed Complaint

Rent-stabilized tenants complained of rent overcharge in 2007. The DRA ruled for tenants and ordered landlord to refund $2,951, including interest. Tenants appealed, arguing that landlord had filed fraudulent rent registrations and that their apartment wasn't vacant on the base date, as claimed by landlord. The DHCR sent the case back to the DRA for recalculation of the overcharge using the default formula. The DRA made no change to its initial ruling on remand, and tenants appealed again.

The DHCR again upheld the prior ruling. The DHCR found that: (a) the apartment was vacant on the Aug. 1, 2003 base date; (b) it remained vacant until tenants moved in in 2006; (c) the default formula didn't apply where an apartment was vacant on the base date; (d) the DRA properly utilized the $1,495 rent agreed upon by landlord and tenants as the first stabilized rent following vacancy; (e)  there was no proof of a fraudulent scheme to deregulate the apartment; (f) the first agreed-upon stabilized rent following a vacancy on the base date can never be the product of fraud; and (g) the rent charged was well below the vacancy deregulation threshold.

Tenants then filed an Article 78 court appeal of the DHCR's order. The DHCR agreed to take the case back again for reconsideration, and then again denied tenants' PAR. Among other things, landlord's inability to produce a base date lease and rent ledger resulted from the apartment's vacancy on the base date and not due to any factor that would permit use of the default formula to set the base date rent. And, while there were some errors in the prior order, the result was the same. 

Manela/Lim: DHCR Adm. Rev. Docket No. JX410002RP (6/15/22)[9-pg. document]