Rent Overcharge of Over $179,000 Due to Outstanding Rent Reduction Order

Tenants complained of rent overcharge. The DRA ruled for tenants and found a total overcharge of $179,550 with triple damages and interest. Tenant appealed and lost. Rent Stabilization Code (RSC) Section 2526.1, in effect when the DRA issued his order, limited examination of rent history records to post-base date rental events unless one of the RSC's listed exceptions applied. Tenants argued that the DHCR should examine whether there was a fraudulent scheme to deregulate the apartment. But the DRA correctly found insufficient indicia of fraud to warrant examination of pre-base date rental events. The reason for the overcharge finding was that, due to an outstanding rent reduction order, the base date rent was frozen at $288.49 per month. Since there was a reliable base date rent, otherwise set at $2,078, there was no need to apply the DHCR's default formula. And there was no need to examine pre-base date rents to determine the apartment's regulatory status since it was undisputed that the unit was rent stabilized. 

Guialdo: DHCR Adm. Rev. Docket No. HQ410006RT (8/8/19) [7-pg. doc.]