Tenant's Preferential Rent Must Remain in Place Upon Lease Renewal

Rent-stabilized tenant complained of rent overcharge. The DRA ruled against tenant, who appealed and lost. Tenant then filed an Article 78 court appeal, claiming that the DHCR's decision was arbitrary and unreasonable. Tenant and the DHCR agreed to send the case back for further consideration. The DHCR then ruled for tenant and ordered landlord to refund $50,000, including interest. Landlord then filed an Article 78 court appeal, and the court sent the case back to the DHCR in 2022 to conduct a hearing to determine the intent of the parties concerning the duration of a preferential rent clause included in tenant's initial lease.

After the hearing, the DHCR ruled for tenant, and found that that tenant's vacancy lease lacked specific language defining or limiting the duration of the stated preferential rent. The preferential rent clause in the lease was open-ended and not limited to the vacancy lease term, and any ambiguity in the vacancy lease rider must be construed against landlord as the drafter of the document. The DHCR also found that the apartment's low ceiling height was a factor in why tenant received a preferential rent. The DHCR concluded that tenant's preferential rent must remain in place upon lease renewal, and that there was no need to recalculate the overcharge refund already decided.

Quinan: DHCR Adm. Rev. Docket No. LU410003RP (1/28/25)[6-pg. document]