Subtenant Claims Rent-Stabilized Tenant Was Illusory Prime Tenant

Subtenant complained of illusory prime tenancy and rent overcharge by rent-stabilized tenant. The DRA ruled for subtenant in part, finding no illusory tenancy but directing tenant to refund $54,000 in rent overcharge, including triple damages. The DHCR denied subtenant's PAR. Subtenant then filed an Article 78 court appeal, and the case was sent back to the DHCR for further consideration. The DHCR had incorrectly ruled that there was no illusory tenancy because there was no proof that landlord was in collusion with the prime tenant. The DHCR ruled that the DRA must conduct additional fact finding. There is no requirement that landlord actually knew of the illegal subtenancy arrangement or that landlord colluded with tenant to facilitate the illegal subtenancy. The DRA should determine whether landlord knew, or should have known, of the illegal subtenancy.

Riggin: DHCR Adm. Rev. Docket No. GO410004RP (5/17/18) [4-pg. doc.]