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WHERE THERE IS NO FRAUD ON THE LANDLORD’S PART, THE NYC DEPARTMENT OF HOUSING AND COMMUNITY RENEWAL CANNOT LOOK BACK FURTHER THAN THE FOUR-YEAR STATUTE-OF-LIMITATIONS PERIOD IN THE RENT STABILIZATION LAW TO DETERMINE THE BASE RENT FOR CALCULATING AN OVERCHARGE (FIRST DEPT).

The First Department, reversing the NYC Department of Housing and Community Renewal (DHCR), over an extensive two-justice dissent, determined the DHCR erred when it looked back more than for years from the date of the rent overcharge complaint to determine the base rent for calculating the amount of the overcharge. There was no dispute that the landlord was receiving J-51 tax benefits and was therefore subject to the Rent Stabilization Law (RSL), which had a four-year statute of limitations:

The primary question presented in this appeal is how to determine the proper rent on the base date. * * *

… [I]n the absence of evidence of fraud, this Court has declined to look back more than four years before the filing of the overcharge complaint to set the base date rent … .

In the case at bar, DHCR was not arbitrary and capricious in finding that landlord did not engage in a fraudulent scheme to evade the Rent Stabilization Law. As a consequence, DHCR was prohibited from looking at the unit's rental history before November 2, 2005 [four years before the overcharge complaint]. …

[The legislature] not only set a four-year limitations period, but it also explicitly barred any “examination of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint” (RSL § 26-516[a][2]). The Court of Appeals has found that the purpose of the four-year limitations period is “to alleviate the burden on honest landlords to retain rent records indefinitely” … . The Court of Appeals has made what we have called a “limited exception” to the four-year limitations period in cases where landlords act fraudulently … . To expand this exception to landlords who have not engaged in fraud would create a much broader exception that would appear to negate the temporal limits contained in the Rent Stabilization Law and the CPLR. Matter of Regina Metro. Co., LLC v New York State Div. of Hous. & Community Renewal, 2018 NY Slip Op 05797, First Dept 8-16-18

LANDLORD-TENANT (MUNICIPAL LAW, WHERE THERE IS NO FRAUD ON THE LANDLORD'S PART, THE NYC DEPARTMENT OF HOUSING AND COMMUNITY RENEWAL CANNOT LOOK BACK FURTHER THAN THE FOUR-YEAR STATUTE-OF-LIMITATIONS PERIOD IN THE RENT STABILIZATION LAW TO DETERMINE THE BASE RENT FOR CALCULATING AN OVERCHARGE (FIRST DEPT))/MUNICIPAL LAW (LANDLORD-TENANT, WHERE THERE IS NO FRAUD ON THE LANDLORD'S PART, THE NYC DEPARTMENT OF HOUSING AND COMMUNITY RENEWAL CANNOT LOOK BACK FURTHER THAN THE FOUR-YEAR STATUTE-OF-LIMITATIONS PERIOD IN THE RENT STABILIZATION LAW TO DETERMINE THE BASE RENT FOR CALCULATING AN OVERCHARGE (FIRST DEPT))/RENT STABILIZATION LAW  (LANDLORD-TENANT, WHERE THERE IS NO FRAUD ON THE LANDLORD'S PART, THE NYC DEPARTMENT OF HOUSING AND COMMUNITY RENEWAL CANNOT LOOK BACK FURTHER THAN THE FOUR-YEAR STATUTE-OF-LIMITATIONS PERIOD IN THE RENT STABILIZATION LAW TO DETERMINE THE BASE RENT FOR CALCULATING AN OVERCHARGE (FIRST DEPT))/RENT OVERCHARGE  (MUNICIPAL LAW, WHERE THERE IS NO FRAUD ON THE LANDLORD'S PART, THE NYC DEPARTMENT OF HOUSING AND COMMUNITY RENEWAL CANNOT LOOK BACK FURTHER THAN THE FOUR-YEAR STATUTE-OF-LIMITATIONS PERIOD IN THE RENT STABILIZATION LAW TO DETERMINE THE BASE RENT FOR CALCULATING AN OVERCHARGE (FIRST DEPT))/CIVIL PROCEDURE (MUNICIPAL LAW, LANDLORD-TENANT, WHERE THERE IS NO FRAUD ON THE LANDLORD'S PART, THE NYC DEPARTMENT OF HOUSING AND COMMUNITY RENEWAL CANNOT LOOK BACK FURTHER THAN THE FOUR-YEAR STATUTE-OF-LIMITATIONS PERIOD IN THE RENT STABILIZATION LAW TO DETERMINE THE BASE RENT FOR CALCULATING AN OVERCHARGE (FIRST DEPT))/CPLR 213-a (MUNICIPAL LAW, LANDLORD-TENANT, WHERE THERE IS NO FRAUD ON THE LANDLORD'S PART, THE NYC DEPARTMENT OF HOUSING AND COMMUNITY RENEWAL CANNOT LOOK BACK FURTHER THAN THE FOUR-YEAR STATUTE-OF-LIMITATIONS PERIOD IN THE RENT STABILIZATION LAW TO DETERMINE THE BASE RENT FOR CALCULATING AN OVERCHARGE (FIRST DEPT))

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SUPREME COURT PROPERLY GRANTED DEFENDANTS’ MOTION TO SET ASIDE THE VERDICT... LANDLORDS PROPERLY CALCULATED THE RENT OVERCHARGE PURSUANT TO THE NYC RENT STABILIZATION...