Substantial Increase in Rent Based on IAIs Didn't Indicate Fraud

Rent-stabilized tenant complained of rent overcharge, and claimed fraud in how landlord set the rent. Tenant moved into the apartment in 2016 under a one-year vacancy lease charging a legal regulated rent of $3,177 per month and a preferential rent of $2,450 per month. Prior tenant paid $697 per month. While not required to do so, landlord showed that it set tenant's pre-base date rent by adding a vacancy increase, longevity bonus, and additional rent increase based on individual apartment improvements (IAIs) costing $57,635. The DRA ruled against tenant, finding no overcharge since all rent increases following the base date rent of $2,471 were lawful.

Tenant appealed and lost. Tenant presented no proof of a fraudulent scheme to deregulate the apartment that would have warranted investigation of specific rental events prior to that date. A mere increase in rent alone, without more, isn't sufficient to require the agency to investigate beyond the four-year base date. Although tenant argued that DOB hadn't issued any permits for the IAIs, the DHCR typically didn't find such permits required when reviewing rent history records. And landlord properly acknowledged the building's J-51 tax benefit status by maintaining the high-rent apartment as rent stabilized. [Download PDF of decision here.]

Terry: DHCR Adm. Rev. Docket No. FW410050RT (6/6/18) [4-pg. doc.]