First Rent-Stabilized Rent After Rent Control Can't Be Preferential Rent

Tenant filed a fair market rent appeal. He was the first rent-stabilized tenant of the apartment and paid $1,400 per month when he moved in on Nov. 1, 2007. Landlord confirmed that the apartment was previously rent controlled. Landlord renovated the apartment before tenant moved in at a cost of $38,000. Landlord argued that the resulting legal rent was over $2,000, so the apartment was deregulated. The DRA ruled against tenant, but for a different reason. The DRA found that the fair market rent for the apartment was more than the amount paid by tenant. But the DRA ordered landlord to file an amended apartment registration because $1,400 was the legal regulated rent, not a preferential rent. Landlord appealed and lost. A preferential rent can't be more than the "previously established legal regulated rent, as adjusted by the most recent applicable guidelines increases and other increases authorized by law." Since tenant's rent was the first stabilized rent, the tenant's rent can't be a preferential rent since there is no "previously established" legal stabilized rent. Tenant's apartment remains rent stabilized since his first rent was $1,400.

First Ocean Realty Co., LLC: DHCR Adm. Rev. Docket No. XI210056RO (1/13/10) [2-pg. doc.]