Tenant Entitled to Continuation of Preferential Rent

Landlord asked the DHCR to rule on whether it must renew tenant's rent-stabilized lease at a preferential rent. Tenant's initial 1994 lease contained a preferential rent rider and all later renewals had continued to be based on a preferential rent. The DRA ruled for landlord, finding that landlord was entitled to discontinue the preferential rent on tenant's next lease renewal. Tenant appealed, pointing out that his preferential rent rider stated that "All renewal lease increases for the subject apartment during the tenant's tenancy shall be based upon the preferential rent (plus any lawful increase[.])" The DHCR ruled for tenant. Since 2003, Rent Stabilization Code Section 2521.2(a) has permitted landlords to discontinue preferential rents upon lease renewal if they choose to do so. However, New York State courts have ruled that landlords can't rely on this Code Section if, prior to the 2003 amendment, landlord and tenant signed a lease clause stating that tenant would receive the benefit of a preferential rent for the duration of tenant's occupancy. The Rent Stabilization Law also requires landlord to renew tenant's lease on the same terms and conditions as the initial lease. Landlord argued that the phrase "plus any lawful increase" in tenant's preferential rent rider meant that the parties agreed to renewal at the higher legal regulated rent. But that phrase was further explained in the lease rider to mean increases such as MCI or new equipment increases.

Kirchoffer: DHCR Adm. Rev. Docket No. VK420004RT (2/7/08) [4-pg. doc.]