Tenant Entitled to Continued Preferential Rent

Tenant complained that in 2005 landlord gave her a rent-stabilized renewal lease based on the legal regulated rent instead of on the lower preferential rent previously agreed to. The DHCR ruled against tenant. The DHCR found that the Rent Stabilization Law and Code permitted landlord to discontinue the preferential rent upon lease renewal. Tenant appealed, claiming that the DHCR's decision was arbitrary and unreasonable. The court ruled for tenant. Tenant's initial 1991 lease contained a rider that clearly provided for a preferential rent for the duration of the tenancy. The lease rider stated: ''It is agreed that all lease extensions after the first year will be based on'' the preferential rent, and increased by applicable rent guidelines. The DHCR's interpretation of the 2003 amendment to the Rent Stabilization Law was incorrect. The law wasn't intended to void the lease agreement between landlord and tenant, which was a contract. In addition, the DHCR incorrectly found that it couldn't consider tenant's 1991 lease, because it was signed more than four years before tenant complained. The lease rider was a term of tenant's original lease that was carried forward in each renewal lease.

Sugihara v. DHCR: NYLJ, 10/31/06, p. 22, col. 1 (Sup. Ct. NY; Madden, J)