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Re: Legal rent vs. preferential rent

Posted by TenantNet on August 06, 1997 at 01:17:09:

In Reply to: Legal rent vs. preferential rent posted by Rachel on August 01, 1997 at 17:38:54:

: 1. A broker took me to see this apartment in September of 1994. It
was listed for $1300. I made an appointment with the landlord to sign
the lease. The afternoon before I was to sign the lease, the broker
called me and said the landlord now wanted to raise the rent to $1350.
Since I was desperate, I said okay, but I did think it was a little fishy.

It depends on what was permissible by the guidelines.

: 2. A little background: Around 1988 or 1989, this building was put up
for auction, which is when the current owner purchased it. Somewhere in
the dim recesses of my memory, I think I remember hearing something about
this affecting the amount of rent charged. This building is also subject
to something called an escalator clause, allowing the landlord to charge
me an additional 2.2% of the initial rent. I'm unclear about whether or
not this is the charge allowed by Real Property Tax Law Section 421-a,
or something else entirely.

Read about this stuff in the RGB orders and RS code.

: 3. Anyway, I renewed my lease in October 1996 for the "preferential
rent" amount of $1507.45. The lease renewal stated that the legal
regulated rent for this apartment was $2076.09.

Scam time (I think). 421a and escalator clauses get more complicated than
can be discussed here -- do a search. 421 is an tax abatement for the
landlord in exchange for the unit being put under stabilization. Preferential
rent is something else entirely. But if at $2076, the the owner could
(probably falsely) claim the unit was deregulated on the next vacancy.

: 4. My lease renewal for October 1997 claims a legal rent of $2179.89,
and a preferential rent of $1751.97.

If you are actually paying $1751, that sounds like an overcharge -- up $400
in three years.

: 5. Here's my dilemma: my landlord is the most curmudgeonly, hostile,
miserly person I know. I find it difficult to believe that he would
charge me a penny less than the law said he could, not only because he's
just not that kind of guy, but also because he and I are in court over a
non-payment proceeding. In fact, I was in court with him today to vacate
a 72 hour notice of eviction.

There are other economics at work -- scams on getting the place deregulated
when you move out. He's working both sides. If you're in court, I would
consider getting the court to determine the legal rent and challenge all this
other stuff -- preferential, etc. Find out exactly the true situation with
the 421-a.

: 7. Not only that, but I know of another tenant in my building who took
him to court over rent overcharges, and won--to the tune of tens of
thousands of dollars.

These days DHCR goes out of its way to approve these kinds of illegalities.
If you don't have a lawyer, get one and have him/her look at the complete
situation and don't agree to any stip unless you get good legal advice.

: 8. The DHCR's records are somewhat confusing, but their figures are in
accordance with the ones on his lease.

That's because he is the one who submitted the figures. Most tenants think
these are DHCR-approved figures. They're not. The owner submits what he
wants and DHCR never bothers to check. Even when things are brought to
their attention, they won't do anything.

Did DHCR give you a complete rental history on this? The new law may disallow
your challengin anything prior to four years ago, but you appear to be
within that time frame.

: Am I missing something here? And why would a landlord (especially
this one) charge a tenant he was trying to evict a preferential rent?

Because he can get away with the scam. He tells the tenant (and reports
to DHCR) what he claims is the legal rent, but charges you less so not
to arouse your suspicions. When you vacate, he'll "deregulate" the unit
and DHCR will refuse to investigate.

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