Court Affirms DHCR Finding of No Fraud and No Rent Overcharge

(Decision submitted by Eileen O'Toole, Esq. of the Manhattan law firm of Borah, Goldstein, Altschuler, Nahins & Goidel, P.C., attorneys for the landlord.)

Rent-stabilized tenant complained of rent overcharge. The DHCR ruled against tenant, finding no overcharge. Tenant filed an Article 78 court appeal, claiming that the DHCR's decision was unreasonable. Tenant argued that the apartment had been fraudulently deregulated.

The court ruled against tenant and found no fraud because: (1) tenant was rent stabilized; (2) the apartment was re-registered as rent stabilized by 2010 after prior landlord had incorrectly registered the apartment as permanently exempt; and (3) a rent decrease after tenant moved in was the result of a rent reduction order, not fraud. Tenant also argued that the DHCR should have looked back more than four years to determine the validity of a base-date preferential rent. But, since landlord couldn't substantiate the higher legal regulated rent and the DHCR set the base rent as the rent charged, there was no need to look back more than four years. In addition, the rent charged on the base date wasn't rendered unreliable based on the erroneous deregulation of the apartment.

Mitchell v. DHCR: Index No. 101275/2017 (Sup. Ct. NY; 7/2/18; Bluth, J) [5-pg. doc.]