DHCR Can't Waive Back Rent Owed by Tenant

LVT Number: 19330

(Decision submitted by Robert H. Gordon of the Manhattan law firm of Shaw & Binder, P.C., who represented the landlord.) Tenant filed a fair market rent appeal in 1990, claiming that her initial $830 rent-stabilized rent was more than the fair market rent. The DRA ruled for tenant in 1995 and found that the fair market rent was $550. Landlord appealed. The DHCR ruled for landlord in 2000, after applying new comparability data rules issued in the Rent Stabilization Code in 1997. The DHCR now found that tenant's legal rent was less than the fair market rent. Tenant appealed.

(Decision submitted by Robert H. Gordon of the Manhattan law firm of Shaw & Binder, P.C., who represented the landlord.) Tenant filed a fair market rent appeal in 1990, claiming that her initial $830 rent-stabilized rent was more than the fair market rent. The DRA ruled for tenant in 1995 and found that the fair market rent was $550. Landlord appealed. The DHCR ruled for landlord in 2000, after applying new comparability data rules issued in the Rent Stabilization Code in 1997. The DHCR now found that tenant's legal rent was less than the fair market rent. Tenant appealed. The court sent the case back to the DHCR for further consideration. In the meantime, the comparability data rules contained in the Rent Stabilization Code were again amended in 2000. The DHCR again ruled in 2004 that tenant's legal rent was less than the fair market rent. But the DHCR also ruled that tenant didn't have to pay landlord $19,000 in back rent that was owed as a result of the DHCR's decision. Landlord appealed, claiming that the DHCR's decision was arbitrary and unreasonable. The court ruled for landlord. The DHCR appealed and lost. Once the DHCR found that tenant's rent didn't exceed the fair market rent, it had no authority to waive back rent owed by tenant to landlord. The DHCR argued that Rent Stabilization Code Section 2527.7 allowed it to waive tenant's back rent based on hardship or prejudice to tenant. But the DRA order reducing tenant's rent advised him that it was an interim, nonbinding decision that could be modified on appeal. While landlord's PAR was pending, the DHCR also notified tenant that it would apply amended Rent Stabilization Code provisions that allowed more comparability data to be used than previously. And tenant could have been putting the disputed difference in rent into escrow while the appeal was pending. Tenant also didn't claim any hardship.

IG Second Generation Partners, LP v. DHCR: NYLJ, 12/5/06, p. 31, col. 6 (App. Div. 1 Dept.; Tom, JP, Mazzarelli, Friedman, Marlow, Malone, JJ)