Special Formula Used to Set Rent in Building Bought at Judicial Sale

(Decision submitted by Jack Kuttner of the Manhattan law firm of Kucker Kraus & Bruh, LLP, attorneys for the landlord.) Tenant complained of a rent overcharge. The DRA ruled for tenant and ordered a refund of $53,000. This included triple damages and a rent freeze for not registering the building in some years. Landlord appealed, claiming that it was a receiver and was unable to get prior rent records. The DHCR ruled for landlord, in part. Generally, if no rent history records regarding the base date are submitted, DHCR uses a default method to set the legal rent. For cases involving judicial sale purchasers, the DHCR uses a modified default procedure. In such cases, the DHCR will set the rent as the average of: a) the lowest rent in the building for an apartment with the same number of rooms; b) the complaining tenant's initial rent, minus a one- or two-year rent guideline plus the vacancy allowance; and c) prior tenant's rent. In other cases the DHCR takes the lowest of these three numbers rather than averaging them. This reduced the overcharge amount to $12,000.

Reliable Mgmt.: DHCR Adm. Rev. Dckt. No. HH510080RO (7/6/99) [6-pg. doc.]