Tenant's Legal Rent Too Low for Deregulation

Tenant moved into landlord's building in 1981 and was given a rent-stabilized lease. New landlord bought the building in 1991 and asked the DHCR to rule on whether tenant was in fact rent stabilized. Landlord claimed that the building contained only five apartments. Landlord also refused to renew tenant's lease in 1992. Landlord and tenant then agreed in 1995 to a retroactive lease for the period between Nov. 1, 1994, and Oct. 31, 1996. They also agreed to a monthly rent of $1,700, which was greater than the rent-stabilized rent, and that the lease would be renewed forever for two-year terms at rates set by the Rent Guidelines Board. In 2002, landlord sent tenant an income certification form (ICF) as a predicate to seeking high-rent/high-income decontrol of the apartment. Tenant then sued landlord, seeking a declaration that the 1995 lease was valid and stopping landlord's attempt to have the unit declared exempt from rent stabilization. Landlord in turn, filed a high-rent/high-income deregulation application in June 2002. The DRA ruled for landlord because tenant's rent and household income exceeded the luxury deregulation thresholds. Tenant appealed and lost. Tenant then filed an Article 78 appeal, claiming that the DHCR's decision was unreasonable. The case was sent back to the DHCR, which revoked the deregulation order and sent the case back to the DRA for recalculation of tenant's rent. The DRA then found that tenant's legal regulated rent in April 2002 was $1,882 and therefore was too low for luxury deregulation. Tenant and landlord both appealed. Tenant claimed that the legal rent should be less than the DRA determined. Landlord claimed certain documents weren't considered. The DHCR ruled against both sides. Tenant then filed another Article 78 appeal, and the case was sent back to the DHCR. The DHCR then ruled for tenant and reduced the legal regulated rent to $1,700, using the DHCR's default method. 

Drucker: DHCR Adm. Rev. Docket No. ZE410001RP (11/29/12) [5-pg. doc.]