Tenant Who Signed Commercial Lease Was Rent Stabilized

Tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $17,733, including triple damages plus interest. Landlord and tenant both appealed and lost. Tenant argued that the DRA ignored his fraud claim. But the DRA properly found insufficient proof of any fraudulent scheme by landlord to deregulate the apartment and therefore no reason to investigate rental events prior to the 2010 base rent date. Tenant voluntarily signed a 2005 business lease for the apartment. The lease said that the apartment would be used as a music studio and that tenant could make changes to the electrical system of the apartment for that purpose. Landlord registered the apartment as temporarily exempt. Tenant also didn't claim that the apartment was his primary residence or that he didn't voluntarily sign the 2005 business lease until 2014. Landlord also had sued tenant in State Supreme Court, seeking a declaration that the apartment wasn't tenant's primary residence. These actions didn't demonstrate fraud and the base date rent information was available to determine any rent overcharge. Landlord also filed all missing rent registrations prior to issuance of the DRA's order. Landlord argued that triple damages shouldn't apply. While there was insufficient proof of a fraudulent scheme to deregulate the apartment, nothing supported a finding that the overcharge wasn't willful.

Estate of Morrison/Leonhart: DHCR Adm. Rev. Docket Nos. ET410055RO, ET410088RT (7/12/17) [9-pg. doc.]