DHCR default formula used based on illusory tenancy #25751.

Position:RENT OVERCHARGE
 
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Tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $14,800, including triple damages and interest. The DRA set tenant's legal rent at $1,535 using the DHCR's default method calculation. Landlord appealed and won, in part.

Landlord claimed that the apartment was owner-occupied on the base rent date and therefore temporarily exempt from rent stabilization. Landlord further claimed that the $1,800 monthly rent charged to the next tenant in 2008 became the new legal rent. The complaining tenant later was charged $2,200 per month, and the apartment was properly deregulated due to high-rent vacancy.

Landlord's employee had rented the apartment to tenant at $2,200 per month under an illusory tenancy. Con Ed bills in the owner's name and DHCR rent registrations didn't prove that the apartment was owner-occupied on the base rent date. Landlord rented the apartment to its employee starting Jan. 1, 2008, under a non-stabilized lease at $1,800, and the employee was never registered as a rent-stabilized tenant. The fact that the employee rented the apartment to tenant three months later raised serious questions about whether the...

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