Landlord Relied on DHCR Interpretation of High-Rent Vacancy Under J-51

Rent-stabilized tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $38,700, including interest. Tenant appealed and lost. Tenant claimed that the DRA used the wrong base rent date, incorrectly granted landlord a rent increase for individual apartment improvements (IAIs), and failed to impose triple damages for willful overcharge. The base date used was correct. Tenant claimed that she lived in the apartment while the IAIs were performed and therefore her written consent was needed to collect a rent increase for the improvements. But the IAIs were done during November 2007 while tenant was still a subtenant of prior tenant. Tenant's lease didn't commence until Dec. 1, 2007. Whether tenant moved out during November 2007 voluntarily and left her belongings in the apartment didn't matter. The apartment was legally vacant while the IAIs were being done. The DHCR also found no willful overcharge. Landlord had deregulated the apartment, located in a J-51 building, based on high-rent vacancy in 2007. This was before New York's highest court ruled in 2009 in Roberts v. Tishman Speyer Properties LP that luxury deregulation didn't apply while a building was under J-51. Landlord reasonably believed at the time that it was entitled to deregulate the apartment based on the DHCR's interpretation of the law. So triple damages didn't apply. 

Ryckman-Rubio: DHCR Adm. Rev. Docket No. BP410041RT (9/9/14) [5-pg. doc.]