Recitation, as required by CPLR §2219(a), of the papers considered in the review of Respondent’s Motion.PAPERS NUMBEREDRespondent’s Notice of Motion, Affirmation in Support, & Exhibits (“A” — “I”) 1, 2Affirmation in Opposition, & Exhibits (“A- “I”) 3, 4Reply Affirmation 5DECISION/ORDER Upon the foregoing cited papers, the Decision and Order is as follows:This nonpayment proceeding was commenced against respondent who is a “Very Low Income” rent stabilized tenant within a building that is part of the DHPD Neighborhood Entrepreneur Program. Respondent occupies a “Home” apartment within the building. The building is subject to a Regulatory Agreement and a Home Agreement with DHPD. The issue presented in this case concerns whether petitioner was entitled to raise respondent’s monthly rent for her two- bedroom apartment by, essentially, 25 percent (from $731.37 to $913.00) so long as the increased rent did not violate the ceiling of the chargeable rent established periodically by DHPD for all apartments within the project.1The parties do not dispute that the monthly rent charged in respondent’s last renewal of $913.00 does not exceed the maximum chargeable monthly rent of $971.00 currently in effect for apartments such as the subject premises2. While petitioner goes to great lengths to establish the DHPD approved “lower” rents and maximum chargeable rents, that is not the issue here. The issue concerns petitioner’s claim that at any time while the regulatory agreement is in effect, which it still is in this case, petitioner may renew respondent’s lease and increase the rent as much as petitioner wants as long, as it does not exceed the maximum allowable collectable rent.Respondent disputes this and asserts that petitioner is limited to the annual one and two-year renewal increases issued each year by the Rent Guidelines Board (“RGB”). Per respondent, it follows that the current lease renewal and any subsequent DHCR registration are void as they contain an illegal rent for the subject premises. Respondent moves for summary judgment dismissing the petition under CPLR Section 3212 as well as for a judgment on respondent’s Second Counterclaim founded in allegations of rent overcharge3. Respondent also seeks a hearing on attorney’s fees, should respondent be successful on her motion.Even a cursory review of the Regulatory Agreement makes it clear that the Neighborhood Entrepreneur Program went to great lengths to ensure that tenants were both recognized as Rent Stabilized, as well as protected by the provisions of the Rent Stabilization Code4. While petitioner may be able to charge the maximum collectable rents to tenants entering into occupancy today, the respondent herein was in occupancy at the commencement of the program.By “Order and Report of Setting Regulated (Stabilized) Rent Services” issued for respondent’s unit on August 29, 2005, DHPD not only incorporated “stabilized” into the heading, but specifically stated:Pursuant to Section 804 of the Private Housing Finance Law, after the establishment of rents, the owner shall offer tenants in occupancy a new two year lease at such rent. A tenant may sign such a lease or request a one year lease if he or she wishes to remain in occupancy; in either case, the owner may demand a new rent established herein from the effective date of this Order and Report. Subsequent rent increases and lease renewals are subject to the laws, rules and regulations of the rent stabilization system (emphasis supplied).Furthermore, that Order, after recognizing that DHPD (“the Agency”) “has been authorized by law to establish rents for rental units rehabilitated pursuant to Article 8 of the Private Housing Finance Law,” established the new initial rent (legal rent) at $2,266.00 effective September 1, 2005. DHPD also in that Order, however, ruled in connection with respondent’s unit that “[p]ursuant to a regulatory Agreement dated May 2003 and based upon the income certification conducted by the landlord, the collectible rent for the apartment will be $600.00 per month”5.In fact, the $600.00 per month rent issued by DHPD was the rent registered for the unit in 2005 as directed, albeit with a notation “pref rent imprvmnt”. While this designation of a “pref rent” is contained in all registrations through 2009, it is not indicated thereafter. Section 5(A)(2)(ii) of the regulatory agreement specifically states that the “Lower rent,” i.e. the maximum rent for units under the agreement, after the initial rents are set shall be:Subsequently as such rent as it would have been adjusted pursuant to the Rent Stabilization Code as if it had been the initial legal regulated rent. The Lower rent shall not be deemed a preferential rent for such unit. Owner shall follow all procedures and guidelines of the New York State Division of Housing and Community Renewal (or its successor Agency with jurisdiction over enforcing the Rent Stabilization Code) and all relevant requirements of the Rent Stabilization Code so that the Lower rent shall not be deemed a preferential rent.6Thus, not only did DHPD expect the units to be subject to the rent Stabilization Code, but further, DHPD was preventing any sudden large rent increase in the rent being charged by prohibiting the treatment of the rents as “preferential”. This would prevent the preferential rent from being revoked at some point while still subject to the Restriction Period of the regulatory agreement.7 Even after the expiration of the Restriction Period, the Regulatory Agreement states that respondent’s rent “shall not exceed the lesser of (A) the Lower Rent or (B) the most recent rent charged to and paid by such tenant which may thereafter be adjusted pursuant to the Rent Stabilization Code or any successor statute”.Moreover, the Regulatory Agreement in Section 5(D) states that: Owner shall not utilize any exemption or exclusion from any requirement of the Rent Stabilization Code to which Owner might otherwise be or become entitled with respect to one or more units, including, but not limited to, any exemption or exclusion from the rent limits, renewal lease requirements, registration requirements or other provisions of the Rent Stabilization Code due to (i) the vacancy of a Unit where the rent exceeds a prescribed maximum amount, (ii) the fact that tenant income and/or unit rent exceed prescribed maximum amounts, (iii) the nature of the tenant, or (iv) any other factor.There simply is no denying that respondent’s tenancy, and any rent increases in connection with that tenancy, were subject to the Rent Stabilization Law and therefore, subject to the RGB guideline increases. By so holding, this court declares the current renewal, as well as the subsequent DHCR registration reflecting the renewal, void as a matter of law as they contain an improper and illegal rent charged to respondent. Until such time as petitioner offers respondent a proper renewal with the RGB increases, the $731.37 monthly rent, as the legal rent, continues8Therefore, the court grants respondent’s motion to dismiss the proceeding based upon an incorrect rent demand and without prejudice to petitioner recommencing with a proper demand for any rent actually owed, as adjusted hereafter. Based upon the $186.63 overcharge for 11 months ($913 paid minus the legal rent of $731.37) starting September 2016 (see petitioner’s rent history annexed as exhibit “D” to respondent’s motion), this court awards respondent a money judgment against petitioner on respondent’s Second Counterclaim in the sum of $1,997.93. As to the balance of respondent’s motion seeking a hearing on attorney’s fees, that is denied. Respondent has failed to set forth any lease agreement provision under which respondent maintains the right to legal fees directly or through application of RPL Section 234.This constitutes the Decision and Order of the Court.SO-ORDEREDDATED September 6, 2018
