No Legal Regulated Rent Set for Apartment

Facts: Landlord sued to evict tenant for nonpayment of rent in the amount of $640 per month. Tenant claimed landlord had collected a rent overcharge. Landlord had bought the building in 1982, tenant moved into the apartment in 1989, and landlord didn't register the apartment with the DHCR until 1994, after tenant raised the issue in court. Tenant also claimed that there was false information in the rent registration statements. Landlord claimed that the building was vacant and not suitable for occupancy in 1982. She renovated it and started renting apartments in 1987. Landlord said that she was then entitled to charge tenant a fair market rent based on the long-term vacancy and the renovations. The court ruled for tenant. The court found that, because of landlord's failure to file an initial registration statement (RR-1), the legal rent for tenant's apartment was the last rent-controlled rent and reduced tenant's rent to that amount. Landlord was ordered to refund to tenant $75,000 in overcharges, including triple damages. Landlord appealed. Court: Landlord wins. The lower court had improperly reduced tenant's rent to the last rent-controlled rent. Although the lower court had relied on earlier appellate case law, the Smitten case was wrong and, in light of recent amendments to the law, should no longer be applied. The Rent Regulation Reform Act doesn't require that the rent be reduced to the last rent-controlled rent if no initial registration is filed. Also, tenant can't claim a rent overcharge until a legal regulated rent has been established. The court revoked the overcharge award and said that tenant could file a fair market rent appeal to challenge his rent so that DHCR could establish a legal regulated rent.

Murray v. Morrison: NYLJ, p. 29, col. 1 (7/6/99) (App. T.2 Dept.; Aronin, JP, Scholnick, Patterson, JJ)