No Fraud by Landlord Who Treated Apartment as Deregulated Under DHCR Policy

LVT Number: #26674

Rent-stabilized tenant complained of rent overcharge. The DRA found an overcharge of $15,790. But since tenant owed $49,600 in back rent, the overcharge was offset against the arrears and there was no refund due to tenant. Tenant appealed and lost. Tenant claimed that landlord fraudulently deregulated the apartment and that therefore the DHCR’s default formula should be used to set the legal rent. Landlord didn’t file a report of statutory decontrol after the prior rent-controlled tenant vacated in 2001.

Rent-stabilized tenant complained of rent overcharge. The DRA found an overcharge of $15,790. But since tenant owed $49,600 in back rent, the overcharge was offset against the arrears and there was no refund due to tenant. Tenant appealed and lost. Tenant claimed that landlord fraudulently deregulated the apartment and that therefore the DHCR’s default formula should be used to set the legal rent. Landlord didn’t file a report of statutory decontrol after the prior rent-controlled tenant vacated in 2001. Tenant’s initial rent in 2001 was $2,400, and landlord began receiving J-51 tax benefits for the building in 2004. The base rent date for tenant’s complaint was April 8, 2009, at which time tenant paid $2,750 per month in rent. Landlord didn’t file annual apartment registrations for the apartment from 2003 through 2015. The DHCR found there was no indication of fraud. Tenant had four years from 2001 to file a fair market rent appeal to challenge his initial rent-stabilized rent but didn’t do so. The DRA correctly froze tenant’s 2010 rent at $2,160 based on landlord’s failure to register the apartment. But when landlord bought the building, he reasonably believed that the apartment was deregulated based on DHCR policy concerning the effect of J-51 benefits in effect before New York’s highest court ruled otherwise in the Roberts case. 

 

 

Knowles: DHCR Adm. Rev. Docket No. DR410041RT (10/27/15) [4-pg. doc.]

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