In Grimm v. DHCR,1 issued on Oct. 19, 2010, a sharply divided Court of Appeals ruled that when it appears that the “base rent” in an overcharge case is “fraudulent,” the Division of Housing and Community Renewal (DHCR) must investigate such fraud and may not use the base rent for further calculations if fraud is indeed present. Judge Robert S. Smith, who authored the three-judge dissenting opinion, wrote that by virtue of the majority’s decision, “the four-year limitation [on rent overcharge claims] has largely ceased to exist.”
History
The tortured 27-year history of the so-called four-year rule, first enacted pursuant to L. 1983, ch. 403, is beyond the scope of this article. It is sufficient to note that as amended by the Rent Regulation Reform Act of 1997 (L. 1997, ch. 116), RSL §26-516(a) states in relevant part:
Where the amount of rent set forth in the annual rent registration statement filed four years prior to the most recent registration statement is not challenged within four years of its filing, neither such rent nor service of any registration shall be subject to challenge at any time thereafter.
This paragraph shall preclude examination of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this subdivision.
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