Successor Rent-Stabilized Tenant Not Entitled to Continuation of Preferential Rent

The son of a rent-stabilized tenant complained to the DHCR after tenant died, claiming that he had succession rights and that landlord refused to give him a renewal lease. The son claimed that he moved in with tenant in June 2016 and that she died in August 2018. In response, landlord argued that the son didn't submit sufficient proof for his succession claim. And, even if he qualified for succession, he didn't qualify for the lower preferential rent currently in effect. On Dec. 1, 2006, tenant had signed an Actual Collectible Rent Agreement (ACR) in a settlement with landlord. The ACR led to a DHCR order issued in December 2006 that set the initial rent for successor tenants and provided that successor tenants would have to pay the legal regulated rent. The DRA ruled for the son, finding that he had proven succession rights and that, under HSTPA, his future rent must be based on guideline increases to the preferential rent of $946 that tenant last paid rather than the $2,508 maximum rent amount for the apartment. 

Landlord requested reconsideration and won. Landlord pointed out that the building exited Mitchell-Lama in 2005 and became subject to rent stabilization. The initial legal regulated rents for tenants became the last rents paid under Mitchell-Lama. The former landlord then sought rent increases from the DHCR, resulting in the ACR. The ACR provided that, in order to claim succession rights to an apartment when an ACR agreement was in place, the successor's right to pay the ACR was limited to individuals who satisfied four listed requirements. Landlord argued that the deceased tenant first became a tenant in 2005 and therefore didn't meet the initial criteria of a 10-year residency prior to Dec. 1, 2006, in order to have an "ACR successor." Tenant also didn't identify such a person when she signed the ACR. Landlord claimed that both the DHCR and court precedent permitted landlord to charge the non-ACR successor the legal rent, that said increase over the prior preferential rent was authorized by law, and that such rent increase was not limited by HSTPA. The DRA agreed that HSTPA didn't apply and that the son failed to prove that he met all four ACR requirements to succeed to the apartment with the preferential rent. 

The son appealed and lost. He claimed that HSTPA mandated continuation of the preferential rent from the prior tenancy and that landlord sought an improper loophole here. The DHCR ruled that the son was entitled to succession rights but wasn't entitled to continue paying the tenant's preferential rent set under the ACR. The language of the ACR and the subsequent DHCR order were binding precedent. And courts have ruled that nonqualifying ACR successors aren't entitled to pay the lower rent. HSTPA didn't apply to rents governed by the ACR and prior DHCR/court orders. And HSTPA provided that  preferential rent can be subject to "other increases authorized by law."

Jones: Admin. Rev. Docket No. JW410008RT (2/7/22)[3-pg. document]