Landlord Can't Charge Preferential Rent Under Initial Stabilized Lease After Vacancy Decontrol

Rent-stabilized tenant complained to the DHCR of rent overcharge. The DRA found no overcharge and dismissed the complaint. Tenant appealed and won, in part. Tenant moved into the apartment in 2011 and filed his complaint in February 2019. Tenant claimed that the DHCR should look back beyond the four-year base date because landlord engaged in a fraudulent scheme to deregulate the apartment. But the DHCR found no grounds for a finding of fraud. Landlord never tried to deregulate the apartment. The Owner's Report of Vacancy Decontrol listing the prior rent-controlled rent was consistent with the initial rent-stabilized registration when tenant moved into the unit. The highest rent charged for the apartment prior to HSTPA was $1,498 per month.  However, the DHCR could and did look back to pre-base date rental events under RSC Section 2521.2 to examine the legitimacy of a preferential rent charged when tenant moved in. Since tenant was the first rent-stabilized tenant after the prior rent-controlled tenancy ended, landlord wasn't permitted to charge a preferential rent for the initial stabilized rent.  So the preferential rent became the  initial legal regulated rent. There was a total rent overcharge of $8,467, including interest. No triple damages were assessed since landlord mistakenly believed that it could charge a preferential rent. 

Padilla: DHCR Adm. Rev. Docket No. LP610007RT (11/2/23)[7-pg. document]