Landlord Had Improperly Deregulated Tenant's Apartment

LVT Number: #32486

An unregulated tenant complained of rent overcharge and fraudulent deregulation in 2017. The DRA ruled for tenant and ordered landlord to refund $64,390, including interest. Landlord appealed to the DHCR and lost (see LVT #31915). Among other things, the DHCR ruled that it didn't matter whether landlord had waived a higher claimed legal regulated rent.

An unregulated tenant complained of rent overcharge and fraudulent deregulation in 2017. The DRA ruled for tenant and ordered landlord to refund $64,390, including interest. Landlord appealed to the DHCR and lost (see LVT #31915). Among other things, the DHCR ruled that it didn't matter whether landlord had waived a higher claimed legal regulated rent. The DHCR also omitted an MCI increase when calculating the overcharge because landlord didn't list tenant's apartment in the MCI application landlord pointed to.

Landlord then filed an Article 78 court appeal, challenging the DHCR's exclusion of two potential rent increases in its calculation of the legal regulated rent. The court ruled against landlord, who appealed and lost. The DHCR's finding that landlord had waived any lawful rent increases by failing to timely apply them to tenant's lease was supported by a rational basis. Landlord had failed to increase tenant's rent by 4 percent in 2014 under RGBO Order No. 45. The DHCR's 2014 MCI rent increase order also granted landlord another rent increase for rent-stabilized tenants at the building, but landlord didn't list tenant's apartment in its MCI application because, at that time, it treated tenant's apartment as deregulated. So, the DHCR reasonably determined that a rent increase under the MCI order wasn't a "subsequent lawful increase" to be included in the legal regulated rent.

 

Matter of 81st Realty Corp. v. DHCR: Index No. 152358/22, App. No. 17409, Case No. 2022-04585, 2023 NY Slip Op 01058 (App. Div. 1 Dept.; 2/28/23; Kern, JP, Oing, Kennedy, Mendez, Pitt-Burke, JJ)