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Is this Fraud?

NYC Rent Regulation: Rent Control/Rent Stabilized, DHCR Practice/Procedures

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Is this Fraud?

Postby In aNYminute » Tue Feb 28, 2006 8:56 am

I've obtained a copy of my rent registration history from the DHCR which shows that my landlord quadrupled the rent some years ago when the apartment first went from rent control to stabilized. The history also show that the landlord did not register the increase for 6 years, effectively hiding the huge and probably illegal increase past the statue of limitation. I spoke to a non housing attorney who stated that the statue of limitations on fraud is one year after it's discovery. With this in mind, would it be possible to file an overcharge compliant for all the years I have been living in my stabilizied apartment? Appoximately 10.
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Re: Is this Fraud?

Postby Anna » Tue Feb 28, 2006 9:59 am

The initial 'legal regulated rent' on an apt moving from RC to RS due to voluntary vacancy is increased per the SPECIAL GUIDELINE plus IAI, if any. It could be as high as you describe. LL must also serve an Initital Registration (usually on the first RS T), which can be challenged by a FMRA (similar to RENT OVERCHARGE, but not one).

Search these three sites for terms in caps & for more info, including DHCR & Court decisions (on TN only):
http://tenant.net/
http://housingnyc.com/
http://www.dhcr.state.ny.us/ora/ora.htm
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Re: Is this Fraud?

Postby Aubergine » Tue Feb 28, 2006 7:07 pm

My guess is that this is a totally dead-in-the-water claim. A fair market rent appeal is available to the first non-rent-controlled tenant during a short filing window, and is also subject to the four-year statute of limitations and evidence rule. If your claim is basically that the decontrolled rent was above the fair market rent, that's exactly the claim that the FMRA process is set up to hear, and if you (or a prior tenant) missed the chance to bring that claim, it's almost certainly too late to revive it. It wouldn't hurt, however, to get more details about the rent/tenancy history to help clarify the issue.
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Re: Is this Fraud?

Postby In aNYminute » Tue Feb 28, 2006 8:09 pm

My claim is that by purposely not registering the vacancy decontrol increase for six years, the landlord intent was to avoid any kind of fair market reveiw and the statue of limitations. If the first rent stabilized tenant as I, had no rider attached to the lease and no idea that such a large increase occurred how could they complain?

From what I've read at the DHCR site,the landlord would have had to have made approx $30,000 in inprovements to justify that increase at 1/40% per month. Judging from the state of my apartment, that seems unlikely.

Thank you for your feedback
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Re: Is this Fraud?

Postby Aubergine » Tue Feb 28, 2006 10:08 pm

See DHCR Fact Sheet #6 ("Fair Market Rent Appeals"):

"A FMRA is a challenge to that negotiated rent, and it must be filed by a tenant within four years after the vacancy that caused the apartment to become decontrolled or within 90 days after the owner mails the requisite written notice (Form RR-1) of the initial legal regulated rent by certified mail to the tenant, whichever first occurs."

http://www.dhcr.state.ny.us/ora/pubs/html/orafac6.htm (emphasis added).

In any case, you are misunderstanding what a "fair market" rent can be based on. It can be a rent charged for similar but UNREGULATED units in the area. It does NOT need to be based on the RGB special guidelines plus the cost of individual apartment improvements. But all of that is academic if the time to file a FMRA passed years and years ago.
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Re: Is this Fraud?

Postby In aNYminute » Tue Feb 28, 2006 11:35 pm

Thanks for the link which revealed something more interesting...

"If the appeal is denied or not filed in a timely manner, then the negotiated initial legal regulated rent becomes the lawful rent, not subject to challenge. All future rent increases, whether for a renewal or vacancy lease, are subject to limitations provided under the Rent Stabilization Law."

The apt status before the quad increase is already marked RS and this rent reflected a doubling of the previous RC amount. The lease was renewed for two more years by the same tenant at what seems like a normal increase. It was the next tenant that received the whopping increase. If the apt was already RS, wouldnt the quad increase be in violation of the rent guideline increases allowed by the RSL? Wouldnt the lawful rent be the RS plus whatever the rent guideline increases allowed back then? It was this increase that wasnt registered until six years later.

<small>[ February 28, 2006, 10:39 PM: Message edited by: In aNYminute ]</small>
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Re: Is this Fraud?

Postby Anna » Tue Feb 28, 2006 11:45 pm

However, if LL deliberately evaded the RSL/RSC, the 4-yr SOL might not apply.
Read the threads on the recent Court of Appeals decision in Thornton v. Baron and the 3 decisions that adopted its ruling. Start here: http://www.tenant.net/.WWW/ubbgraphics/ultimatebb.php?ubb=get_topic;f=3;t=001292

<small>[ March 01, 2006, 09:30 AM: Message edited by: Anna ]</small>
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Re: Is this Fraud?

Postby In aNYminute » Wed Mar 01, 2006 8:38 am

Thank you Anna. I might be able to prove fraud from the reading of the rent history. There are all soughts of irregularities, from filing increases years later, doubling and quadrupling of the rent. Even my first renewal was listed as a vacancy lease and the rent increased by 20%.

Could I file an overcharge complaint now for only the past four years (or ten years?) using a simular arguments:

Petitioner's reliance on the four year statute of limitations for a rent overcharge claim is not accurate where there are genuine issues of fraud. Where there is no valid registration on the base date the registration is void, and a default formula should be used to determine the base date rent."

"Reflecting an attempt to circumvent the Rent Stabilization Law in violation of the public policy of New York, the Baron lease was void at its inception. Further, because the rent it purported to establish was therefore illegal, the 1996 rent registration statement listing this illegal rent was also a nullity."

<small>[ March 01, 2006, 07:41 AM: Message edited by: In aNYminute ]</small>
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Re: Is this Fraud?

Postby Anna » Wed Mar 01, 2006 10:28 am

The tenant bar has been trying to get DHCR & the courts to rule that the 4-yr SOL does not apply to RO/FMRA cases where LL filed fraudulant DHCR registrations ever since the LL-lobby succeeded in getting Albany to adopt it. The Court of Appeals agreed in 2005 in a case that involved a LL's attempt to evade the whole RSL/RSC by renting an apt as non-RS. Thornton was not just about overcharging one T.

No one has a crystal ball; no one can guarantee that DHCR or the courts will apply the Thornton ruling to other cases. Read those decisions where HC judges did do so & watch for the decisions of the appellate courts on those.

"I might be able to prove fraud from the reading of the rent history."
Doubtful that fraud can be PROVEN with only a DHCR Rent History. Also, in your latest version 10:39 2/28, you now state that the huge increase came with a RS vacancy lease, not when apt left RC for RS. Are any regs 'amended'? Is there any explanation code on that line? Did you run the numbers thru RGB's Vacancy Lease Calculator? http://housingnyc.com/html/guidelines/vac_calc/vaccalc.html
It would also be helpful to you to learn if LL filed similar false regs for other apts in that bldg or in other bldgs that LL owns. (ask your neighbors, have them request their Rent Histories)

"Could I file an overcharge complaint now for only the past four years (or ten years?)"
You're not yet ready to even have a consultation w/ a T-atty. Learn more about the whole RO subject; get more info from DHCR's files (such as the history of applications/complaints: was there an MCI? & perhaps FOIL the actual registration forms)

Then consult one or more T-attys (remember, if you win, the RSC allows you to collect your atty fees from the LL). Go to HC in Manhattan, use the public access computers to find the names of the attys who represented the winning Ts in Wai Chan v Gao Xiao Ying10 Misc.3d 1065(A),
N.Y.City Civ.Ct. 2005. and Sage Franklin LLC v. Cameron, 10 Misc.3d 1069(A), N.Y.City Civ.Ct. 2005. Print them, & Thornton, & Levinson from Westlaw http://government.westlaw.com/nyofficial/default.asp?tempinfo=HOME

Some light reading:
http://www.tenant.net/alerts/articles/complaining.html
http://www.rentovercharge.com/
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Re: Is this Fraud?

Postby In aNYminute » Thu Mar 02, 2006 4:24 am

Thank you once again for the advice and links Anna. Yes, there was an amendment for D/A filed many years later, but still BEFORE the big jump, and after the first RS where the rent doubled. MCI came years later during my tenancy. I will look into this in greater depth in the coming days.
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Re: Is this Fraud?

Postby In aNYminute » Mon May 22, 2006 1:48 am

Somewhat reinvigorated by the decision in Drucker v Mauro. I'm going to the DHCR tomorrow to have an agent reveiw/explain my rent history. Can they be trusted to just interpret honestly the information in my history or should I be on the lookout for bias in favor of the landlord? Thanks
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Re: Is this Fraud?

Postby TenantNet » Mon May 22, 2006 4:50 am

There are some good people in the lower echelons of DHCR, but the higher you go, yes, you will find a bias towards LLs.
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Re: Is this Fraud?

Postby Landlord's Boy » Mon May 22, 2006 7:48 am

I assure you it is quite possible for a $500 RC unit to be renovated and jump immediately to a $2000 deregulated unit - especially if the unit has more than one bathroom. It can happen either on the basis of FM rent or capital improvements.

One oddity is that DHCR is not always consistent about the requirement for filing "exit registrations". Supposedly it has to be done within 90 days of the first deregulated tenant's occupancy; it practice, they have asked me to postpone filing until the annual rent registrations - it reduces their paperwork, and the law says the unit deregulates if the LRR is over $2k regardless.

As for the late registration here: it may just be sloppiness on the part of the LL.
Always Report Leaks Immediately!
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Re: Is this Fraud?

Postby In aNYminute » Mon May 22, 2006 10:53 pm

The DHCR confirms the triple rent jump is very questionable. There were no MCI or IAI until years after. Then of course they played the SOL card. The whole building in nearly destabilized!!!
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Re: Is this Fraud?

Postby In aNYminute » Fri Jun 09, 2006 6:48 pm

Question: If a LL does not register rent increases with the DHCR for 6 years, does the increases become legal when they finally register them?

edit* Is there some legitimate explain for not registering a RS apt for 6 years while tripling the rent and making increases?

<small>[ June 09, 2006, 08:08 PM: Message edited by: In aNYminute ]</small>
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