Apartment Improperly Deregulated During Receipt of J-51 Tax Benefits

Tenant complained of rent overcharge, claiming that landlord had improperly deregulated his apartment in a J-51 building. The DRA ruled for tenant, finding the base date rent of $1,925 was legal but that there had been some overcharge after that. Landlord was ordered to refund a total overcharge of $5,558, including interest. Tenant appealed and lost, claiming that landlord had engaged in a fraudulent scheme to deregulate the apartment. The apartment had been last registered at $1,606 in 2007, before tenant moved in. But landlord submitted pre-base date rent history records to prove that it increased the rent within applicable guidelines before the apartment was deregulated and during its receipt of J-51 benefits until August 2012, when an overcharge did occur. And any failure by landlord to register the rent prior to the base date didn't prevent the DHCR from determining the legal regulated rent by reviewing the prior lease. In J-51 cases, landlord is entitled to calculate lawful rent increases by relying on pre-base date leases. The rent should be frozen at a prior registered rent only if there was fraud. No fraud was found in this case. 

Zappia: DHCR Adm. Rev. Docket No. FO410070RT (1/5/18) [7-pg. doc.]