DHCR Found $123,000 Overcharge to Tenant in 421-a Building

Tenant complained to the DHCR of rent overcharge in January 2019 and claimed that landlord engaged in a fraudulent scheme to deregulate his apartment by misrepresenting to HPD that the building was a condominium in order to receive 421-a tax benefits and charge market-rate rents to tenants. The NY Attorney General had deemed the condo plan abandoned. The DRA ruled for tenant, finding that he was rent stabilized, that the four-year base date rent was $2,838 based on the original 421-a rent, that leases offered to tenant were invalid, and that tenant's rent was frozen at the base date rent until late registration was filed due to landlord's failure to file annual apartment or building registrations for the year 2016. The DRA found that the total rent overcharge was $123,414 to tenant, including triple damages and interest. Landlord was directed to refund $89,014 after deducting $34,400 in back rent owed. 

Landlord appealed and lost. Notwithstanding the AG's approval of landlord's Condominium Plan in 2009, the building became exempt from rent stabilization upon the sale of the first unit on Nov. 4, 2010. Since tenant moved into his apartment on Sept. 15, 2010, which was prior to the official condo conversion date, he was subject to 421-a rental status. And $2,838 was the initial legal regulated rent because it was less than the higher rent that HPD may have approved for the unit. The building's 421-a status had been reinstated in 2016 and was made retroactive to 2011 for the landlord's benefit. So the DRA appropriately set tenant's rent. This result was consistent with a court ruling concerning another tenancy at the building.

The Grand 73 LLC: DHCR Adm. Rev. Docket No. LP210005RO (9/27/23)[7-pg. document]