Rent Reduction Order Freezes Rent at First Rent-Stabilized Rent

Rent-stabilized tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $7,500, including interest. The overcharge finding was based on an outstanding rent reduction order, resulting in a freeze of tenant's collectible rent until the rent was restored by DHCR order. Landlord appealed and lost. Landlord argued that the DRA used an incorrect collectible rent and there was no overcharge. The apartment was occupied by prior rent-controlled tenant on June 1, 2008, the effective date of the rent reduction order. Landlord claimed that the first rent-stabilized tenant paid $1,435 in monthly rent. But the DRA found that the first rent-stabilized tenant paid $1,250 in monthly rent and that landlord hadn't preserved a higher rent amount. Under DHCR Policy Statement 90-10, if a rent reduction order is issued to a rent-controlled tenant and that tenant moves out, the rent remains frozen at the fair market rent set for the first rent-stabilized tenant. But landlord's failure to reserve in writing the right to collect a higher rent was deemed a waiver of that increase. 

DDEH 1567 Lexington LLC: DHCR Adm. Rev. Docket No. FQ410025RO (3/8/18) [3-pg. doc.]