Sandlow v. 305 Riverside Corp.

DECISION AND ORDER I. BACKGROUND   Plaintiff is the tenant of apartment 7A in a multiple dwelling at 305 Riverside Drive, New York County, owned by defendant. Plaintiff commenced this residential rent overcharge action against defendant May 20, 2011, claiming that apartment 7A has been rent stabilized since before plaintiff’s tenancy began February 1, 2005, but defendant unlawfully removed the apartment from coverage under the New York Rent Stabilization Law (RSL), resulting in a rent overcharge since then. Plaintiff bases his claim in part on Roberts v. Tishman Speyer Props., L.P., 13 N.Y.3d 270 (2009), which ruled that apartments in buildings that participated in the “J-51″ real estate tax abatement program, N.Y.C. Admin. Code §11-243 (formerly §J51-2.5), must be treated as rent stabilized for as long as the buildings received the tax abatement. The ruling prohibited landlords, while their buildings were participating in the J-51 program, from using the RSL’s procedure to remove apartments’ rent stabilized status when the rent reached $2,000.00 per month, whether or not the apartments were rent stabilized before entry into the program. Roberts v. Tishman Speyer Props., L.P., 13 N.Y.3d at 286-87. The ruling thus invalidated a New York State Division of Housing and Community Renewal (DHCR) opinion that had permitted that practice for those previously rent stabilized apartments. Id. at 287. Plaintiff claims that defendant, while receiving a J-51 tax exemption for 305 Riverside Drive from 1999 to 2009, treated apartment 7A as deregulated. In a decision dated March 26, 2012, the court (Kenney, J.) granted partial summary judgment declaring that apartment 7A was rent stabilized, based on defendant’s admission that the apartment was rent stabilized. See Tr. of Proceedings at 7 (Jan. 30, 2019). The court denied the balance of the parties’ motions for summary judgment, however, concluding that all the other “causes of action are based on what would be the lawful rent for the unit and what, if any, increases from that amount are permissible under rent regulation law,” and “neither party has presented sufficient evidence for the court to make that determination.” Sandlow v. 305 Riverside Corp., Index No. 106025/2011, slip op. at 7 (Mar. 26, 2012). Both before and since the court’s March 2012 decision, defendant has never disputed apartment 7A’s rent stabilized status. After the parties proceeded through disclosure and a nonjury trial, on June 14, 2019, the New York Legislature enacted the Housing Stability and Tenant Protection Act (HSTPA), “making sweeping changes” to the RSL’s rent overcharge provisions. Dugan v. London Terrace Gardens, 177 A.D.3d 1, 8 (1st Dep’t 2019). After closing arguments, but before the court rendered its decision after the trial, the court afforded the parties the opportunity to argue the HSTPA’s effect on this action. II. THE GOVERNING LAW Part F of the HSTPA amended the RSL, N.Y.C. Admin. Code §26-516, and C.P.L.R. §213-a, which govern claims for rent overcharges and the statute of limitations for those claims. Although the legislation directed that the statutory amendments in Part F of the HSTPA “shall take effect immediately and shall apply to any claims pending or filed on or after such date,” Regina Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, __ N.Y.3d __, slip op. at 24 (Apr. 2, 2020), and plaintiff’s overcharge claim was pending on the effective date of Part F, Regina Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, __ N.Y.3d __, slip op. at 54, held that applying Part F’s amendments retroactively to plaintiff’s claim would violate substantive due process. Therefore the HSTPA does not affect the final determination of this action. Instead, the pre-amendment version of the RSL’s rent overcharge statute, N.Y.C. Admin. Code §26-516, and the decisions that interpreted it control the outcome. No damages for an overcharge may be awarded beginning more than four years, and no penalties for a willful overcharge beginning more than two years, before the action was commenced, rather than the six years permitted by the newly enacted C.P.L.R. §213-a and the amended RSL, N.Y.C. Admin. Code §26-516(a)(2). See Dugan v. London Terrace Gardens, 177 A.D.3d at 8. To determine whether defendant overcharged rent under the law applicable to this action, the court first must determine the legal regulated rent, defined as the rent charged on the base date plus any subsequent lawful increases and adjustments. 9 N.Y.C.R.R. §§2520.6(e), 2526.1(a)(3)(i). The base date is May 20, 2007, the date four years before plaintiff’s overcharge complaint. 9 N.Y.C.R.R. §2520.6(f); Gordon v. 305 Riverside Corp., 93 A.D.3d 590, 592 (1st Dep’t 2012). C.P.L.R. §213-a and the RSL, N.Y.C. Admin. Code §26-516(a), in effect until June 2019 and the Rent Stabilization Code (RSC), 9 N.Y.C.R.R. §2526.1(a)(2), all expressly provided that no determination, calculation, or award of any overcharge may be based on an overcharge more than four years before commencement of the overcharge action. Both the prior C.P.L.R. §213-a and the RSC, 9 N.Y.C.R.R. §2526.1(a)(2)(ii), also precluded examination of the rental history of an apartment more than four years before commencement of the overcharge action. The intent behind the limitation of four years was to “alleviate the burden on honest landlords to retain rent records indefinitely, not immunize dishonest ones from compliance with the law.” Thornton v. Baron, 5 N.Y.3d 175, 181 (2005). III. EXAMINING APARTMENT 7A’S RENTAL HISTORY DUE TO DEFENDANT’S FRAUD The RSC was amended in 2014 to add exceptions to this limitation on examination of rental history that the Court of Appeals had carved out, including to determine whether an owner engaged in a fraudulent scheme to destabilize an apartment. 9 N.Y.C.R.R. §2526.1(a)(2)(iii); Conason v. Megan Holding, LLC, 25 N.Y.3d 1, 16 (2015); Grimm v. State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 N.Y.3d 358, 366 (2010). To justify examining an apartment’s rental history more than four years retroactively, plaintiff must make more than “a mere allegation of fraud alone” against defendant, as such a claim, “without more, will not be sufficient” for the court to inquire further. Conason v. Megan Holding, LLC, 25 N.Y.3d at 16; Grimm v. State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 N.Y.3d at 367. Only actual evidence of fraud will warrant examination of apartment 7A’s rental history beyond four years before plaintiff’s overcharge complaint May 20, 2011. Therefore the threshold question is whether, based on the evidence adduced at trial, defendant’s conduct reveals sufficient evidence of fraud. 9 N.Y.C.R.R. §2526.1(a)(2)(iv); 333 E. 49th Partnership, LP v. New York State Div. of Hous. & Community Renewal, 165 A.D.3d 93, 106 (1st Dep’t 2018). Grimm v. State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 N.Y.3d at 366-67, delineates three categories of factors that in combination warrant the court’s review of an apartment’s rental history beyond the statutory period of four years. (1) The landlord violated the RSL and RSC in addition to charging an illegal rent. (2) The evidence indicates a fraudulent scheme to remove the apartment from rent regulation. (3) The rent registration history is inconsistent with the lease history. The evidence at trial demonstrates all these factors. As set forth below, defendant’s failure to register rents for apartment 7A, failure to provide rent stabilization riders to leases, and setting of rents in derogation of the J-51 tax abatement requirement to treat the apartment as rent stabilized throughout the abatement, 1999-2009, Roberts v. Tishman Speyer Props., L.P., 13 N.Y.3d at 286-87, together warrant examination of apartment 7A’s rental history before May 20, 2007. Defendant’s officer Richard Eisenberg testified that defendant received a J-51 real estate tax abatement from June 1999 to June 2009. Tr. at 48-50 (Apr. 8, 2019). As set forth above, Roberts v. Tishman Speyer Props., L.P., 13 N.Y.3d at 286-87, held that apartments in buildings that received J-51 real estate tax abatements are rent stabilized for as long as the buildings continue to receive those benefits. Thus, by law, apartment 7A was rent stabilized May 20, 2007, four years before plaintiff filed his rent overcharge action. Defendant insists that, while a building may be rent stabilized by virtue of the Roberts holding, an already deregulated apartment in the building would not necessarily regain rent stabilization. Tr. at 6, 8-11 (June 17, 2019); tr. at 14 (Nov. 21, 2019). None of defendant’s witnesses, however, testified to any such rationale for failing to treat apartment 7A as rent stabilized during the 1999-2009 period when 305 Riverside Drive received J-51 tax benefits. Only when plaintiff filed his complaint in 2011 did defendant attempt to cover its tracks by filing rent registration statements with DHCR retroactive to 2007. This act in itself is an indication of fraud. Grimm v. State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 N.Y.3d at 366. Defendant did not make any adjustment to plaintiff’s rent or tender an overcharge refund. See Regina Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, __ N.Y.3d __, slip op. at 24 n.16, 52 n.29. Neither Roberts nor any other authority supports the ex post facto distinction offered by defendant’s attorney between buildings in the J-51 program and apartments in the program. The Appellate Division in Roberts held that “all apartments in buildings receiving J-51 tax benefits are subject to the RSL during the entire period in which the owner receives such benefits.” Roberts v. Tishman Speyer Props., L.P., 62 A.D.3d 71, 80 (1st Dep’t), aff’d, 13 N.Y.3d at 284 (emphasis added). In affirming, the Court of Appeals did not repeat that holding verbatim, but emphasized how the legislative history of the statutes that subject apartments to rent regulation upon the building’s receipt of J-51 tax benefits, N.Y.C. Admin. Code §§26-504.1, 26-504.2(a), “plainly indicates that ‘at no point’ would the luxury decontrol provisions apply to buildings which ‘received’ tax exemptions.” Roberts v. Tishman Speyer Props., L.P., 13 N.Y.3d at 287 (emphasis added). In fact the RSL itself requires its application to: “Dwelling units in a building…receiving the benefits of section 11-243 or section 11-244.” N.Y.C. Admin. Code §26-504(c) (emphases added). See Dugan v. London Terrace Gardens, L.P., 34 Misc. 3d 1240(A), 2011 N.Y. Slip Op. 52501(U) (Sup. Ct. N.Y. Co. 2011), aff’d, 101 A.D.3d 648 (1st Dep’t 2012); Independence Plaza N. Tenants’ Assn. v. Independence Plaza Assoc., LP, 29 Misc. 3d 868, 877 (Sup. Ct. N.Y. Co. 2010). Nor did defendant file rent registration statements in 2011 in a timely response the Roberts ruling, which was in 2009. Roberts governs plaintiff’s claims only to the extent of reaffirming the undisputed rule that apartments in buildings participating in the J-51 real estate tax abatement program must be treated as rent stabilized for as long as the buildings received the tax abatement. Defendant did not remove apartment 7A’s rent stabilized status when the rent reached $2,000.00 per month while 305 Riverside Drive was participating in the J-51 program or because the apartment was rent stabilized before entry into the program, the practice that DHCR previously permitted and that Roberts prohibited. Roberts v. Tishman Speyer Props., L.P., 13 N.Y.3d at 286-87. Rather than deregulating apartment 7A during the period when defendant received J-51 tax benefits, defendant deregulated the apartment before the building entered the J-51 program in 1999. Based on these circumstances, and absent any testimony by defendant’s witnesses to the contrary, defendant did not deregulate apartment 7A in reliance on DHCR’s misguidance. Altschuler v. Jobman 478/480, LLC., 135 A.D.3d 439, 440 (1st Dep’t 2016). See Regina Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, __ N.Y.3d __, slip op. at 13, 15 n.9. Defendant owed a “continuing obligation” to keep apartment 7A rent stabilized until after its building was no longer receiving J-51 tax benefits. Cintron v. Calogero, 15 N.Y.3 347, 354 (2010). That obligation thus “remained in effect during the statutory four-year period” before plaintiff’s overcharge complaint, id. at 356, yet defendant flouted that obligation for its duration. Id. at 355. Therefore the court may consider that “continuing obligation” as part of the rental history. Id. at 355. Examination of defendant’s conduct within the four years before plaintiff’s overcharge complaint, 2007-11, thus evinces its plainly fraudulent scheme to keep apartment 7A deregulated. Defendant flagrantly, without excuse, violated the RSL and RSC upon receipt of J-51 tax benefits in 1999, failed to return the apartment to rent regulation until 12 years after it was required in 1999, and deprived incoming tenants of a rent registration history until long after they unwittingly entered market rent leases, as discussed below. Defendant violated the RSL and RSC repeatedly by not registering apartment 7A beginning in 1997 and never filing annual rent registrations with DHCR until 2011, after plaintiff filed his complaint, and then retroactively only to 2007. N.Y.C. Admin. Code §26-517(a) and (f); 9 N.Y.C.R.R. §§2528.1, 2528.3(a). In short, defendant, knowing full well that it was receiving J-51 tax benefits for its building, deceived plaintiff by misrepresenting that apartment 7A was not rent stabilized. The absence of a rent registration in 1997 warrants examination into the reliability and legality of the $4,200,00 monthly rent charged in 1997 that removed the apartment from rent stabilization. Grimm v. State of N.Y. Div. of Hous. & Community Off. of Rent Admin., 15 N.Y.3d at 366; Thornton v. Baron, 5 N.Y.3d at 181; Altschuler v. Jobman 478/480, LLC., 135 A.D.3d at 440. The totality of evidence summarized above warrants an examination into the entire rental history before 2007 to ascertain the legal regulated rent in 2007, which in turn reveals the greater extent of defendant’s fraudulent scheme. Regina Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, __ N.Y.3d __, slip op. at 10-11; 333 E. 49th Partnership, LP v. New York State Div. of Hous. & Community Renewal, 165 A.D.3d at 106. A. ANN LINDEN’S TENANCY PRECEDING PLAINTIFF’S TENANCY The DHCR “registration apartment information” history that defendant introduced, also referred to as the “rent detail,” shows that Ann Linden was a prior tenant of apartment 7A who executed 10 consecutive leases for two years each for the apartment from 1977 to 1997. Ex. F. Linden was one of three cotenants on several of the older leases, but by the time DHCR’s registration requirement became effective in 1984 she was the only remaining tenant. Exs. H, I; tr. at 85-86 (Jan. 30, 2019). Defendant introduced (1) Linden’s original 1977-79 lease at a monthly rent of $750.00 and (2) a 1997-99 renewal lease that was executed, but not registered, at a monthly rent of $1,660.00. Exs. H, K. The DHCR rent detail also shows that the last lease defendant registered for apartment 7A was Linden’s 1995-97 renewal lease. Ex. F. That registration shows a monthly rent of $1,513.16 during 1995-96 and $1,551.40 during 1996-97 and attributes the $38.24 difference to an increase for a “major capital improvement” (MCI). Id. Although defendant did not offer any evidence regarding this MCI, plaintiff does not question the inclusion of the increase in the rent calculation. Plaintiff accepts the $1,551.40 amount and maintains that it reflects apartment 7A’s last registered rent before the 2011 registrations and thus its last reliable rent, rather than the $1,660.00 amount in the unregistered 1997-99 renewal lease. The 1995-97 registration bears several hallmarks of reliability. First, the DHCR rent detail shows that defendant physically filed that registration. Ex. F. Second, the $1,513.16 monthly rent registered for 1995-96 reflects a $58.19 increase over the 1993-95 renewal lease’s registered monthly rent of $1,454.97, which corresponds exactly to the 4 percent increase permitted for renewal leases for two years in 1993 by the Rent Guidelines Board Order (RGBO). Ex. G. Third, the parties do not dispute the additional $38.24 MCI increase during the second year of the renewal lease, 1996-97. Ex. F. Thus the 1995-97 registration includes no unexplained rent increases. Finally, plaintiff does not contend that the 1995-97 registration was not served on Linden. Therefore the court infers that the registration was, in fact, served in compliance with the RSC. 9 N.Y.C.R.R. §2528.3(b). In sum, this evidence establishes that the 1997 rent registration statement of $1,513.16 per month constitutes a reliable annual registration statement filed and served on the tenant. The 1997 filing is also the “most recent” reliable annual registration statement. N.Y.C. Admin. Code §26-516(a) (2018). Defendant claims that the $1,660.00 monthly rent in Linden’s 1997-99 renewal lease was apartment 7A’s actual last and therefore most recent legal regulated rent before 2007. Tr. at 10, 100 (Jan. 30, 2019). The DHCR rent detail and the testimony, however, establish that defendant never filed a registration statement listing that amount. Ex. G. See Tr. at 3-6 (Nov. 21, 2019). Because the $1,660.00 never appeared on a DHCR registration, no evidence demonstrates that that monthly rent is the most recent reliable legal regulated rent. N.Y.C. Admin. Code §26-517(e); 9 N.Y.C.R.R. §2528.4(a); Moore v. Greystone Props. 81 LLC, 176 A.D.3d 516, 516 (1st Dep’t 2019); Ecumenical Community Dev. Org. v. GVS Props. II, LLC, 168 A.D.3d 522, 523 (1st Dep’t 2019). Administrative Code §26-517 required defendant to file with DHCR a registration statement reflecting the new $1,600.00 monthly rent, but defendant did not do so. It attempts to justify this omission on the basis that, after executing the 1997 renewal lease in April 1997, Linden vacated apartment 7A between April and September 1997. No evidence pinpoints when Linden vacated, whether before the renewal lease term at $1,660.00 per month began August 1, 1997, or shortly afterward. Defendant thus failed to show that the lease at $1,660.00 per month ever became effective. Moreover, if defendant seeks to rely on that lease’s rent to reach the deregulation threshold, defendant must disclose the $1,600.00 monthly rent to the public and thus to any incoming tenant by registering it. Moore v. Greystone Props. 81 LLC, 176 A.D.3d at 516. B. ELIAS KULUKUNDIS’S TENANCY IMMEDIATELY PRECEDING PLAINTIFF’S TENANCY On September 2, 1997, defendant executed another lease for two years for apartment 7A with a new tenant, Elias Kulukundis, that ran from September 15, 1997, until September 30, 1999, at a market rent of $4,200.00 per month. Ex. L. Defendant claims it did not file a 1998 registration statement with DHCR reflecting that amount because Linden’s vacatur in 1997 allowed defendant to raise the apartment’s legal monthly rent above the $2,000.00 threshold for deregulation, obviating further compliance with the registration requirement. Defendant’s managing agent, Ari Paul, calculated a new rent above $2,000.00 by increasing the $1,660.00 monthly rent in Linden’s unfiled and abandoned 1997-99 renewal lease with (1) a 20 percent “vacancy allowance” of $332.00 and (2) a “long-term vacancy bonus” of $122.84 arrived at by multiplying the 19 years Linden lived in the apartment by 0.6 percent of its last monthly rent, $1,660.00. Tr. at 101 (Jan. 30, 2019). See 9 N.Y.C.R.R. §2522.8(a) (1998) (now repealed). Paul testified that combining both increases resulted in a $2,114.84 monthly rent, above the $2,000.00 deregulation threshold. Tr. at 101 (Jan. 30, 2019). Paul’s method followed the now repealed RSC provision, 9 N.Y.C.R.R. §2522.8(a), governing “Rent adjustments upon vacancy or succession,” that permitted two types of rent increases. When an incoming tenant of an apartment executed an initial lease for two years, §2522.8(a)(1) permitted the apartment’s rent to be increased by a 20 percent “vacancy allowance.” See N.Y.C. Admin. Code §§26-504.2(a), 26-511(c)(5-a); Altman v. 285 W. Fourth LLC, 31 N.Y.3d 178, 184 (2018); Ruggerino v. Prince Holdings 2012, LLC, 170 A.D.3d 568, 569 (1st Dep’t 2019); 233 E. 5th St., LLC v. Smith, 162 A.D.3d 600, 600 (1st Dep’t 2018). Section 2522.8(a) also permitted the landlord to collect a “longevity increase” in the new lease, Ador Realty, LLC v. Division of Hous. & Community Renewal, 25 A.D.3d 128, 131-32 (2d Dep’t 2005), whenever “the legal regulated rent was not increased…by a permanent vacancy allowance within eight years prior to a vacancy lease.” 9 N.Y.C.R.R. §2522.8(a)(2)(ii). See Rosenzweig v. 305 Riverside Corp., 35 Misc. 3d 1241(A), 2012 N.Y. Slip Op. 51103(U) (Sup. Ct. N.Y. Co. 2012). This “longevity increase” was calculated by multiplying the previous legal regulated rent by 0.6 percent and then multiplying the resulting amount by the greater of: (a) the years since the last vacancy allowance or (2) if no vacancy allowance had ever been collected, by the years that the apartment was subject to rent stabilization. Section 2522.8(a) also permitted landlords that collected vacancy or longevity increases to include MCI or Individual Apartment Improvement (IAI) increases in a “vacancy lease,” but prohibited landlords from including RGBO increases. The RSC, 9 N.Y.C.R.R. §2522.8(a), thus permitted defendant to impose both “vacancy” and “longevity” increases after Linden vacated apartment 7A in 1997. If the court accepted defendant’s unregistered 1997 renewal lease’s $1,660.00 monthly rent as the starting point, the resulting $332.00 vacancy increase (20 percent of $1,660.00) combined with the resulting $189.24 longevity increase (0.6 percent of $1,660.00 or $9.96, multiplied by 19 years) would yield a new rent of $2,181.24. If the court rejects the unregistered 1997 renewal lease’s $1,660.00 monthly rent and uses the registered 1995-97 renewal lease’s $1,551.40 monthly rent instead, the resulting $310.28 vacancy increase (20 percent of $1,551.40) combined with the resulting $176.89 longevity increase (0.6 percent of $1,551.40 or $9.31, multiplied by 19 years) still yield a new rent of $2,038.57. Trainer v. State of N.Y. Div. of Hous. & Community Renewal, 162 A.D.3d 461, 462 (1st Dep’t 2018). Thus, whichever previous lease’s monthly rent figure is used in the calculations, the resulting post-vacancy rent exceeded the $2,000.00 per month deregulation threshold. Therefore Linden’s vacatur of apartment 7A in 1997 triggered its lawful deregulation. The RSC, 9 N.Y.C.R.R. §2522.5(c)(1), however, then required defendant to present to Kulukundis at the inception of his tenancy in 1997 a vacancy lease “rider” that explained how his rent had been calculated from apartment 7A’s “prior legal rent” and would have enabled him to challenge the rent if it was not legal. Kulukundis’s lease included no such rider. Ex. M. 9 N.Y.C.R.R. §2522.5(c)(3) provides that a landlord who fails to present a vacancy lease rider to a new tenant “shall not be entitled to collect any adjustments in excess of the rent set forth in the prior lease unless the owner can establish that the rent collected was otherwise legal.” This prohibition would have maintained the collectible rent at $1,600.00 at least for the duration of Kulukundis’s tenancy, except that, as set forth above, the owner has established that the $4,200.00 collected was legal. Defendant’s failure to include a vacancy rider, 9 N.Y.C.R.R. §2522.5(c)(1), with Kulukundis’s 1997 lease when defendant first deregulated the apartment, however, to explain how defendant had recalculated apartment 7A’s rent and determined that the apartment was deregulated, is further evidence of defendant’s fraudulent conduct. Ex. L. The RSC plainly required defendant to include a vacancy rider, 9 N.Y.C.C.R. §2522.5(c)(1), and imposed penalties for failure to do so, 9 N.Y.C.C.R. §2522.5(c)(3), yet defendant ignored this law. Since defendant nowhere indicates it was unaware of this RSC regulation requiring a vacancy rider, ignoring that requirement was “willful ignorance, which constitutes willful conduct,” regardless whether Kulukundis actually complained of that conduct. Grady v. Hessert Realty L.P., 178 A.D.3d 401, 405 (1st Dep’t 2019). Defendant’s conduct constituted intentional concealment that deprived Kulukundis of any ability to challenge its concealed rent calculations. Had Kulukundis ever challenged defendant’s rent calculations in his initial lease, and had he successfully removed the unexplained MCI increase that defendant added to apartment 7A’s rent in 1996-97, he well might have succeeded in challenging the deregulation at that point. Without the MCI increase, the monthly rent in Linden’s prior lease would have been $1,513.16, instead of the registered $1,551.40. Adding a $302.63 vacancy increase (20 percent of $1,513.16) and a $172.52 longevity increase (0.6 percent of $1,513.16 or $9.08, multiplied by 19 years) would yield a new rent of $1,998.31, below the $2,000.00 per month deregulation threshold. By failing to include the vacancy rider with Kulukundis’s lease, defendant deprived Kulukundis of notice of his right to challenge the rent, regardless of the merits of such a challenge. This avoidance of 9 N.Y.C.C.R. §2522.5(c) was part of defendant’s persistent fraudulent conduct. Kulukundis’s initial lease term expired September 30, 1999, when his monthly rent was $4,200.00. Ex. L. As Eisenberg testified, however, defendant began receiving a J-51 real estate tax abatement for the building in June 1999, continuing to June 2009. Tr. at 48-50 (Apr. 8, 2019). This receipt of tax benefits returned apartment 7A to rent stabilized status between 1999 and 2009. Roberts v. Tishman Speyer Props., L.P., 13 N.Y.3d at 286-87. Thus, as discussed above, the apartment was not in the class of apartments addressed in Roberts that the landlord deregulated while receiving J-51 tax benefits when the apartments’ rent reached $2,000.00 per month, in reliance on DHCR’s misguidance permitting that practice for apartments that were already rent stabilized upon the receipt of J-51 tax benefits. Here, defendant had removed apartment 7A from rent stabilized status lawfully when the rent reached $2,000.00 per month before defendant received J-51 tax benefits. When it began to receive them, however, it failed to return the apartment to rent stabilized status: a requirement that Roberts recognizes, but that landlords and DHCR never disputed. As a result of the re-regulation, apartment 7A’s last legal regulated rent remained at the $4,200.00 per month in effect when the building entered the J-51 program. At that point, defendant was restricted to increasing the apartment’s rent only by the methods prescribed by the RSC: RGBO increases, 9 N.Y.C.R.R. §2522.2; MCI and IAI increases, 9 N.Y.C.R.R. §2522.4; and vacancy and longevity increases. 9 N.Y.C.R.R. §2522.8. The RSL, N.Y.C. Admin. Code §26-517(e), further provides, however, that: The failure to file a proper and timely initial or annual rent registration statement shall, until such time as such registration is filed, bar an owner from applying for or collecting any rent in excess of the legal regulated rent in effect on the date of the last preceding registration statement or if no such statements have been filed, the legal regulated rent in effect on the date that the housing accommodation became subject to the registration requirements of this section. The filing of a late registration shall result in the prospective elimination of such sanctions and provided that increases in the legal regulated rent were lawful except for the failure to file a timely registration, the owner, upon the service and filing of a late registration, shall not be found to have collected an overcharge at any time prior to the filing of the late registration. Apartment 7A’s DHCR rent detail shows that defendant did not file any registration statements between 1998 and 2011 and, even then, only incomplete filings retroactive to 2007, Ex. F, two years after plaintiff’s tenancy commenced February 1, 2005. Ex. M. The J-51 program requirements recognized in Roberts, combined with Administrative Code §26-517(e), barred defendant from increasing apartment 7A’s rent above its last “legal regulated” amount of $4,200.00 until 2007. Altschuler v. Jobman 478/480, LLC., 135 A.D.3d at 441. Only after defendant resumed filing registration statements did §26-517(e) permit defendant to collect prospectively the “subsequent lawful increases and adjustments” to the “the legal regulated rent” of $4,200.00. N.Y.C. Admin. Code §26-516(a) (2018). Even though the $4,200.00 collected may have been legal, defendant presented no evidence to justify defendant’s failure to maintain Kulukundis’s monthly rent at $4,200.00, subject to permissible increases and adjustments, after defendant began receiving J-51 tax benefits in 1999. In Grady v. Hessert Realty L.P., 178 A.D.3d at 405, “defendants’ assumption that the apartment was deregulated,” based on a representation by prior management, amounted to “willful ignorance, which constitutes willful conduct, particularly since defendants are sophisticated property managers and owners.” See Obiora v. New York State Div. of Hous. & Community Renewal, 77 A.D.3d 755, 756 (2d Dep’t 2010). Here, defendant, a sophisticated property owner with a sophisticated property manager, did not just engage in “willful ignorance, which constitutes willful conduct.” Defendant was not ignorant of the law requiring apartment 7A to be re-regulated, nor of the facts regarding how it became deregulated and that it remained deregulated, despite the law to the contrary, yet still chose to flout it. More significantly, defendant also unjustifiably failed to file DHCR registration statements for apartment 7A for 1999 through 2006 in violation of the RSL, N.Y.C. Admin. Code §26-517(a), and Roberts. Defendant’s only explanation was that: We did register prior to any finding by the Appellate Division that Roberts was retroactive. We did so in an exercise of caution. In 2011 we registered back to 2007, which was at that time…all you had to do was register back four years and any review…of a registration beyond four years in the absence of fraud at that time was impermissible…. Roberts obviously wasn’t decided until years later. And…we registered as exempt, so everybody was on notice as to what the landlord’s — it was as of record what the landlord’s position was that being that the apartment was exempt in 1998 based upon the registration. Exempt apartments don’t have to be registered. So it’s registered as exempt registration not required for all the years 1999 through and including 2006. And then in 2011 my client registered, you know, back to 2007 which was four years going back four years which was what the requirement was at that time and that’s basically our position on it. Tr. at 30-31 (Nov. 21, 2019). Yet Roberts unmistakably held that a building’s receipt of J-51 tax benefits renders the building rent stabilized for the duration of those benefits. Roberts v. Tishman Speyer Props., L.P., 13 N.Y.3d at 286-87. The RSL, N.Y.C. Admin. Code §26-517, subjects landlords of rent stabilized buildings to the annual DHCR registration requirement. Defendant’s witnesses admitted that defendant obviously knew the building began receiving J-51 tax benefits in 1999. See Tr. at 5-6 (June 17, 2019). This awareness, coupled with the Roberts ruling in 2009, renders defendant’s “position” that defendant was not required to register apartment 7A between 1999 and 2006 legally indefensible. “Neither [a landlord's] asserted personal ignorance of the law nor her attorney’s incorrect advice justified her overcharging of the tenants’ rent, especially since she admittedly knew of the existence of a J-51 tax abatement…for the subject building, which rendered the apartment at issue subject to rent stabilization.” Obiora v. New York State Div. of Hous. & Community Renewal, 77 A.D.3d at 756, cited in Grady v. Hessert Realty L.P., 178 A.D.3d at 405. Here, too, the claim by defendant that it was not required to register apartment 7A with DHCR between 1999 and 2006 directly violates both the RSL, N.Y.C. Admin. Code §26-517, and the Roberts holding, which unmistakably combine to require the filing of registration statements throughout the building’s participation in the J-51 program. Defendant’s decision simply to ignore this law again amounts to more than “willful ignorance, which constitutes willful conduct” by a “sophisticated property owner.” Grady v. Hessert Realty L.P., 178 A.D.3d at 405. Since defendant nowhere indicates it was ignorant of the requirement to file registration statements, its failure to do so was another instance of intentional concealment and fraudulent avoidance of the law. Defendant’s failure to file a registration statement listing Linden’s $1,600.00 rent or to file annual registration statements upon its receipt of J-51 benefits satisfies both the first and the third categories of the Grimm factors. Its knowing failure to file registration statements violated the RSL and RSC, satisfying the first category of the Grimm factors. The absence of a registration history, precluding any comparison between rent registrations and the lease history to determine if the $4,200.00 rent charged to Kulukundis and the initial rent charged to plaintiff were legal under the RSL and RSC, satisfies the third category of the Grimm factors. Grimm v. State of N.Y. Div. of Hous. & Community Off. of Rent Admin., 15 N.Y.3d at 366; Altschuler v. Jobman 478/480, LLC., 135 A.D.3d at 440. Finally, keeping apartment 7A deregulated upon the receipt of J-51 benefits was more than simply charging an illegal rent, Grimm v. State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 N.Y.3d at 366-67, and, combined with defendant’s failures to file rent registrations, demonstrates its fraudulent scheme to remove the apartment from rent regulation, satisfying the second category of the Grimm factors. Id. at 366. C. PLAINTIFF’S TENANCY Plaintiff executed his initial lease for apartment 7A December 4, 2004, for a term that ran two years from February 1, 2005, through January 31, 2007. Ex. M. Kulukundis had executed his initial lease for apartment 7A September 2, 1997, for a term that began September 15, 1997, Ex. L, demonstrating that he had occupied apartment 7A less than eight years when he vacated it and plaintiff took possession. Under these circumstances, the RSC, 9 N.Y.C.R.R. §2522.8(a)(1), would have permitted defendant to apply a vacancy increase of $840.00 (20 percent of $4,200.00) to apartment 7A’s rent in 2005 when plaintiff’s initial lease began. 9 N.Y.C.R.R. §2522.5(c)(3) prohibited defendant from doing so, however, because it did not file any DHCR registration statements for the unit until 2011, retroactive only to 2007. Exhibits M-S are plaintiff’s initial lease from February 1, 2005, through January 31, 2007, at $8,750.00 per month and six of his renewal leases: (1) from February 1, 2007, through January 31, 2009, at $9,150.00 per month; (2) from February 1, 2009, through January 31, 2010, at $9,150.00 per month; (3) from February 1, 2010, through January 31, 2011, at $9,150.00 per month; (4) from November 1, 2011, through October 31, 2012, at $9,355.88 per month; (5) from November 1, 2012, through October 31, 2013, at $9,543.00 per month; and (6) from November 1, 2013, through October 31, 2015, at $10,282.50 per month. At least through 2009, during defendant’s receipt of J-51 tax benefits and circumvention of the RSL and RSC during that period, these leases were void at their inception, the rents they purported to establish were illegal, and thus the rent registration statements listing these illegal rents, filed retroactively in 2011, were a nullity. Conason v. Megan Holding, LLC, 25 N.Y.3d at 14; Grimm v. State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 N.Y.3d at 365-66; Thornton v. Baron, 5 N.Y.3d at 181. The filing of registration statements does not transform illegal rents into legal rents that then form the basis for all future rent increases simply because defendant’s fraud remained undetected until 2011. Conason v. Megan Holding, LLC, 25 N.Y.3d at 14-15; Thornton v. Baron, 5 N.Y.3d at 181. It is striking how the facts found above parallel the “substantial indicia of fraud” found in Grimm v. State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 N.Y.3d at 366. The tenant immediately preceding plaintiff, Kulukundis, paid significantly more, $4,200.00 per month, than the previously registered rent, $1,551.40 per month, and was not given a rent stabilized lease rider. Neither when defendant increased the rent to $1,600.00 per month, nor when defendant increased the rent to $4,200.00 per month, nor at any time afterward until 2011, did defendant file registration statements. 9 N.Y.C.R.R. §2528.3(a). In 2011, defendant filed several years’ registration statements retroactively after receiving plaintiff’s overcharge complaint, yet still did not file all the required registration statements. Finally, plaintiff’s initial lease did not include a rent stabilized rider, even though his apartment was subject to rent stabilization by virtue of the building’s receipt of J-51 tax benefits. All these facts undermine the legality of the base date rent of $9,150.00 per month and require the court to determine what the legal regulated rent was, “rather than blindly using the rent charged on the date four years prior to the filing of the rent overcharge claim.” Grimm v. State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 N.Y.3d at 366. Based on the evidence adduced at trial the court makes the following findings of fact regarding the “subsequent lawful increases and adjustments” during plaintiff’s tenancy. N.Y.C. Admin. Code §26-516(a) (2018). At the outset, the rent freeze under the RSL, N.Y.C. Admin. Code §26-517(e), and the RSC, N.Y.C. Admin. Code §2522.8(a), prohibited defendant from applying to plaintiff’s initial lease the RGBO increase as well as the vacancy and longevity increases otherwise authorized, until 2007, the first year for which defendant resumed filing DHCR registration statements for apartment 7A. Exhibit G sets forth the RGBOs’ annual percentage increases for rent stabilized renewal leases for one year and two years executed between 1969 and 2019. A comparison of the RGBO chart and the leases shows that defendant was entitled to collect RGBO increases of: (1) 7.25 percent, applicable to renewal leases for two years executed by September 30, 2007, in the first renewal lease that began February 1, 2007, Exs. G, P; (2) 4.5 percent, applicable to renewal leases for one year executed by September 30, 2009, in the second renewal lease that began February 1, 2009, Exs. G, Q; (3) 3 percent, applicable to renewal leases for one year executed by September 30, 2010, in the third renewal lease that must have run from February 1, 2010, through January 31, 2011, based on the prior and subsequent leases, Exs. G, N, Q; (4) 3.75 percent, applicable to renewal leases for one year executed by September 30, 2012, in the fourth renewal lease that began November 1, 2011, Exs. G, N; (5) 2 percent, applicable to renewal leases for one year executed by September 30, 2013, in the fifth renewal lease that must have run from November 1, 2012, through October 31, 2013, based on the prior and subsequent leases, Exs. G, N, S; and (6) 7.75 percent, applicable to renewal leases for two years executed by September 30, 2014, in the sixth renewal lease that began November 1, 2013, Exs. G, S. Between 2007 and 2010, the court has used the higher percentage increases that the RGBOs permitted where landlords supplied heat to an apartment, since plaintiff’s renewal leases for that period show that defendant supplied the apartment’s heat at no extra cost to plaintiff. Exs. G, N, P-R. Plaintiff’s 2013-15 lease is the last that plaintiff executed in the record. Ex. S. The ledger of his rent payments that he introduced shows that, beginning in 2015, defendant charged him a monthly rent of $10,282.58, but he unilaterally paid $5,000.00 monthly instead, believing he had been overcharged previously, an impasse that continued through the trial. Ex. 3. The RSC, 9 N.YC.R.R. §2523.5(a), requires a landlord to provide to a tenant of a rent stabilized apartment an “offer to renew the lease…at the legal regulated rent permitted for such renewal lease and otherwise on the same terms and conditions as the expiring lease.” Because plaintiff’s last “expiring lease” was a lease for two years, 9 N.YC.R.R. §2523.5(a) required defendant to offer plaintiff renewal leases for two years for: (1) November 1, 2015, through October 31, 2017; (2) November 1, 2017, through October 31, 2019; and (3) November 1, 2019, through October 31, 2021. During those periods, the RGBOs show that defendant was entitled to collect increases of: (1) 2 percent for the 2015-17 period; (2) 2 percent for the 2017-19 period, and (3) 2.5 percent for the 2019-21 period, which the court will apply below. Ex. G. Regarding MCI increases, as set forth above, the parties do not dispute the $38.24 increase in apartment 7A’s rent that defendant imposed in 1997. Because the $38.24 MCI increase was part of apartment 7A’s last reliable registered rent of $1,551.40 per month in 1997, the RSL’s rent freeze, N.Y.C. Admin. Code §26-517(e), did not apply to that increase. D. THE INDIVIDUAL APARTMENT INCREASE Regarding IAI increases, Eisenberg testified that defendant performed renovation work on apartment 7A in 2004, preparatory to plaintiff’s tenancy. Tr. at 37-39 (Apr. 8, 2019). Defendant introduced (1) a 2004 proposal from CDP Building & Design Corp. (CDP) that the total cost of work would be $139,500.00; (2) defendant’s bills from and payments to CDP; and (3) bills from contractors West Side Stone & Marble, Inc., and Sterling Electronics. Exs. A-E. Both Paul and CDP’s president, Joseph Gans, testified to the work and to defendant’s payments for it. Tr. at 14-70 (Jan. 30, 2019). Defendant claims that it was entitled to include an IAI increase in apartment 7A’s rent in 2004, but did not rely on such an increase to support deregulation of the apartment, because defendant already had deregulated the apartment when the work was performed. Tr. at 36-62 (June 17, 2019). Plaintiff contends that yet another act of fraudulent concealment by defendant was the failure actually to perform all the work in the CDP proposal as defendant claims. Joseph Gans admitted that he could not specify what work was performed: whether it was carpentry or painting or on flooring, windows, plumbing, or the electrical system. Tr. at 55 (Jan. 30, 2019). Nor could he specify where CDP obtained any materials for the work or approximate CDP’s overhead expenses. Id. at 57. He also admitted, however, that the work was not structural and “a lot of it was maintenance work.” Id. at 67. Photographs of apartment 7A, albeit recent, show that parts of the work included in the CDP proposal were never performed. Tr. at 151-69 (Apr. 9, 2019); Ex. 4. Robert Wolfson, an engineer and construction cost expert, inspected apartment 7A and reviewed defendant’s Exhibits A-E. Tr. at 64-136 (Apr. 8, 2019). Wolfson’s inspection further revealed parts of the work included in the CDP estimate that had not been performed. No “crown moldings” were ever installed except in one room. Id. at 97-99. The electrical wiring was not upgraded. Id. at 109. Grout was missing between the tiles installed in the bathroom showers, allowing water to leak into the cement board underneath the tiles. Id. at 106. The replacement of wooden window sills and frames with uninsulated, less weatherproof, and less damage resistant sheetrock did not amount to an improvement. Id. at 101-103. Other components of the work constituted basic repairs rather than qualifying IAI work. Wolfson also explained that when contractors renovate an entire line of the building’s apartments, as defendant’s witnesses described its renovation work at 305 Riverside Drive, lower costs accrue than when contractors perform discrete work on one apartment. Id. at 113. Accounting for the work that was performed and the costs of labor and materials in 2004 in the New York City area for similar “total unit line renovations,” Wolfson concluded that only $20-25,000.00 of defendant’s expenditures were attributable to qualifying IAI work. Id. at 114. If he could not ascertain a cost in 2004, he used a later year, when the cost was higher, to defendant’s benefit. Id. a 77, 111. Defendant did not present any evidence rebutting Wolfson’s findings and simply rested on the choice not to rely on an IAI increase to support the deregulation, even though defendant was entitled to such an increase. Tr. at 36-62 (June 17, 2019). The resolution of whether work qualifies for an IAI: is not governed by any inflexible rule either that a landlord is always required, or that it is never required, to submit an item-by-item breakdown, showing an allocation between improvements and repairs where the landlord has engaged in extensive renovation work. The question is one to be resolved by the factfinder in the same manner as other issues, based on the persuasive force of the evidence submitted by the parties. Jemrock Realty Co., LLC v. Krugman, 13 N.Y.3d 924, 926 (2010). Defendant maintains that CDP’s estimate and defendant’s payment records establish that defendant spent $139,500.00 on work in apartment 7A and was entitled to an IAI increase based on that total expenditure if it bears on the rent defendant was entitled to charge. Tr. at 3 (June 17, 2019). Neither CDP’s estimate nor defendant’s payment records, however, identify which renovations CDP actually performed or itemize defendant’s payments for them. Tr. at 95-96 (Apr. 8, 2019). See Ecumenical Community Dev. Org. v. GVS Props. II, LLC, 168 A.D.3d at 523; 18 St. Marks Place Trident LLC v. State Div. of Hous. & Community Renewal, Off. of Rent Admin., 149 A.D.3d 574, 574 (1st Dep’t 2017). Expenses for work “including for painting, plastering, and repairing wood floors, were for normal maintenance and repair, and not ‘improvements’” and therefore do not justify IAI rent increases. 125 St. James Place LLC v. New York State Div. of Hous. & Community Renewal, 158 A.D.3d 417, 417 (1st Dep’t 2018). See Yorkroad Assoc. v. New York State Div. of Hous. & Community Renewal, 19 A.D.3d 217, 218 (1st Dep’t 2005); Mayfair York Co. v. New York State Div. of Hous. & Community Renewal, 240 A.D.2d 158, 158 (1st Dep’t 1997). Wolfson credibly explained, without rebuttal, how no more than $25,000.00 of defendant’s $139,500.00 expenditure was attributable to non-cosmetic, renovation work qualifying for an IAI. Tr. at 114 (Apr. 8, 2019). Wolfson’s expert testimony concerning his inspection of apartment 7A and his cost comparison analysis was more credible and persuasive than the landlord’s unitemized documents and blanket $139,500.00, without any explanatory detail. E.g., Cooper v. 85th Estates Co., 57 Misc. 3d 1223(A), 2017 N.Y. Slip Op. 51636(U) (Sup. Ct. N.Y. Co. 2017); Ernest & Maryanna Jeremias Family Partnership, LP v. Matas, 39 Misc. 3d 1206(A), 2013 N.Y. Slip Op. 50505(U) (Civ. Ct. Kings Co. 2013). Although Wolfson used the term “industry standard” when referring to the quality and cost of the renovations, the court does not rely on any “industry standard.” Defendant is entitled to claim whatever it paid for the improvements, as long as it performed the improvements, and as long as the work constituted improvements rather than repairs or maintenance, even if the work was of poor quality and overpriced. Consequently, instead of an IAI equal to 1/40th of $139,500.00 or $3,487.50, defendant was entitled to an IAI equal to 1/40th of $25,000.00 or $625.00, beginning in 2004. The rent freeze under the RSL, N.Y.C. Admin. Code §26-517(e), however, precluded defendant from adding this IAI to apartment 7A’s rent until 2007, the year for which defendant resumed filing DHCR registration statements for the apartment. E. FINAL CALCULATIONS Based on the foregoing findings, the calculations of apartment 7A’s “legal regulated rent,” N.Y.C. Admin. Code §26-516(a) (2018), as of April 1 of each year are as follows: 1997 — $1,551.40 per month (the amount in the last DHCR registration statement that defendant filed during Linden’s tenancy, not the last lease that Linden executed at $1,660.00 per month); 1998 — $4,200.00 per month (the amount in Kulukundis’s initial lease); 1999 — $4,200.00 per month (the amount in Kulukundis’s initial lease for the duration of the initial lease term through September 30, 1999, when the building’s entry into the J-51 program re-regulated the apartment); 2000 — $4,200.00 per month (the amount in Kulukundis’s initial lease by virtue of the re-regulation and defendant’s noncompliance with Administrative Code §26-517(e)); 2001 — $4,200.00 per month (same); 2002 — $4,200.00 per month (same); 2003 — $4,200.00 per month (same); 2004 — $4,200.00 per month (same); 2005 — $4,200.00 per month (same); 2006 — $4,200.00 per month (same); 2007 — $5,174.81 per month (the previous rent augmented by a $625.00 IAI increase and the 7.25 percent RGBO increase authorized for renewal leases for two years executed by September 30, 2007, since plaintiff’s first renewal lease ran from February 1, 2007, through January 31, 2009); 2008 — $5,174.81 per month (same); 2009 — $5,174.81 per month through January 31, 2009, and $5,407.68 per month through December 31, 2009 (the previous rent augmented by the 4.5 percent RGBO increase authorized for renewal leases for one year executed by September 30, 2009, since plaintiff’s second renewal lease ran from February 1, 2009, through January 31, 2010); 2010 — $5,407.68 per month through January 31, 2010, and $5,569.91 per month through December 31, 2010 (the previous rent augmented by the 3 percent RGBO increase authorized for renewal leases for one year executed by September 30, 2010, since plaintiff’s third renewal lease ran from February 1, 2010, through January 31, 2011); 2011 — $5,569.91 per month through September 30, 2011, and $5,778.78 per month through December 31, 2011 (the previous rent augmented by the 3.75 percent RGBO increase authorized for renewal leases for one year executed by September 30, 2012, since plaintiff held over between expiration of his third renewal lease January 31, 2011, and commencement of his fourth renewal lease that ran from November 1, 2011, through October 31, 2012); 2012 — $5,778.78 per month through October 31, 2012, and $5,894.35 per month through December 31, 2012 (the previous rent augmented by the 2 percent RGBO increase authorized for renewal leases for one year executed by September 30, 2013, since plaintiff’s fifth renewal lease ran from November 1, 2012, through October 31, 2013); 2013 — $5,894.35 per month through October 31, 2013, and $6,351.16 per month through December 31, 2013 (the previous rent augmented by the 7.75 percent RGBO increase authorized for renewal leases for two years executed by September 30, 2014, since plaintiff’s sixth renewal lease ran from November 1, 2013, through October 31, 2015); 2014 — $6,351.16 per month (same); 2015 — $6,351.16 per month through October 31, 2015, and $6,478.18 per month through December 31, 2015 (the previous rent augmented by the 2 percent RGBO increase authorized for renewal leases for two years executed after October 1, 2016, since plaintiff’s first renewal period for which he did not execute a lease ran from November 1, 2015, through October 31, 2017; 2016 — $6,478.18 per month (same); 2017 — $6,478.18 per month through October 31, 2017, and $6,607.74 per month through December 31, 2017 (the previous rent augmented by the 2 percent RGBO increase authorized for renewal leases for two years executed after October 1, 2017, since plaintiff’s second renewal period for which he did not execute a lease ran from November 1, 2017, through October 31, 2019); 2018 — $6,607.74 per month (same); 2019 — $6,607.74 per month through October 31, 2019, and $6,772.93 per month through December 31, 2019 (the previous rent augmented by the 2.5 percent RGBO increase authorized for renewal leases for two years executed after October 1, 2018, since plaintiff’s third renewal period for which he did not execute a lease ran from November 1, 2019, through October 31, 2021); 2020 — $6,772.93 per month (same). IV. PLAINTIFF’S LEGAL REGULATED RENT The above findings of fact based on the evidence adduced at trial would lead to a determination that the legal regulated rent for apartment 7A as of the inception of plaintiff’s tenancy in 2005 was $4,200.00 per month and on May 20, 2007, was $5,174.81 per month. The reliable rental history shows that the $4,200.00 monthly rent charged in 1997 complied with the RSL and RSC. The $5,174.81 monthly rent reflects the lawful increases and adjustments between 1997 and 2007. If the evidence from which to make this determination were insufficient, the default formula provided in 9 N.Y.C.R.R. §2522.6 would determine the legal rent on the base date of May 20, 2007. Grimm v. State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 N.Y.3d at 366-67; Thornton v. Baron, 5 N.Y.3d at 181; Altschuler v. Jobman 478/480, LLC., 135 A.D.3d at 440; Levinson v. 390 W. End Assoc., L.L.C., 22 A.D.3d 397, 401 (1st Dep’t 2005). The default formula is “the lowest rent charged for a rent-stabilized apartment with the same number of rooms in the same building on the relevant base date.” Thornton v. Baron, 5 N.Y.3d at 181 n.1. Regina Metro. repeatedly observed, in dictum, that when a landlord engages in a fraudulent scheme to deregulate an apartment, “the legal rent should be based on the ‘default formula.’” Regina Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, __ N.Y.3d __, slip op. at 11 (emphasis added). If review of the rental history revealed a fraudulent scheme to deregulate the apartment, which “tainted the reliability of the rent on the base date,” “the default formula should be used to calculate any resulting overcharge.” Regina Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, __ N.Y.3d __, slip op. at 11 (emphasis added). See Grimm v. State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 N.Y.3d at 366-67. Regina Metro. thus recognizes that Grimm and its progeny do not mandate the default formula when a landlord has engaged in fraudulent conduct. Yet Regina Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, __ N.Y.3d __, slip op. at 12, admonishes that “review of the rental history outside the four-year lookback period was permitted…solely to ascertain whether fraud occurred — not to furnish evidence for the calculation of the base date rent.” See Grimm v. State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 N.Y.3d at 367. Here, however, after ascertaining evidence of defendant’s unlawful, unexplained, and hence fraudulent scheme to keep apartment 7A deregulated within the lookback period of 2007-11, the court reviewed the prior rental history to ascertain the extent of the scheme and, in that process, determined a reliable legal regulated rent on the base date. The rental history demonstrates that the rent charged and collected on the base date, $9,150.00 per month, was unreliable, but also demonstrates that the reliable legal regulated rent was $5,174.81 per month. Grimm v. State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 N.Y.3d at 367, which actually found evidence of the “landlord’s fraudulent deregulation scheme” that “tainted the reliability of the rent on the base date,” as here, framed the fact finder’s task as “an obligation to ascertain whether petitioner’s allegations of fraud warrant the use of the default formula when calculating any rent overcharge that may have occurred.” Thornton v. Baron, 5 N.Y.3d at 181, found that under the circumstances there, “the default formula…was the appropriate vehicle for fixing the base date rent,” observing that the default formula is used where no reliable rent records are available. In both Grimm and Thornton the leases and registration statements did not just violate the RSL; they misrepresented or concealed the actual facts, such as the tenant occupying the apartment and the rent charged and paid. Because the fraud was in the records themselves, they were unreliable for purposes of determining the legal regulated rent for an illegally deregulated apartment. See 333 E. 49th Partnership, LP v. New York State Div. of Hous. & Community Renewal, 165 A.D.3d at 106. Here, the leases, renewals, and rent registration statements accurately set forth the rents charged. But for the $1,600.00 monthly rent in Linden’s last lease, and to the extent defendant filed registration statements, the DHCR registration history mirrors the leases’ rents. Instead, plaintiff’s leases and the registration statements retroactively filed “served as a vehicle for the…fraud,” carrying out the misrepresentation that apartment 7A was not rent stabilized when plaintiff entered his tenancy and the withholding of apartment 7A from rent regulation while appearing to comply with the RSL and its registration requirements. Id. While the rent registrations for 2007-2009 are unreliable, other reliable rent records are available. The parties introduced abundant reliable evidence from DHCR and from defendant’s records dating back to 1977, enabling a determination of the legal regulated rent as of May 20, 2007. Plaintiff himself maintains that: “If the rent records do not establish a reliable rent that has a basis in rent stabilization, the default formula should apply. The whole point of the rental history is to get a rent stabilized history.” Tr. at 17-18 (Apr. 8, 2019) (emphasis added). Here, the rent records do establish a reliable rent stabilized rent. They do not themselves set forth the legal regulated rent, but they provide a history from which the court may estabish and has established a legal regulated rent. Plaintiffs also introduced DHCR’s 2007 Registration Rent Roll Report Effective 04/01/2007 for 305 Riverside Drive. Ex. 2. Plaintiff testified that his apartment 7A contains eight rooms. Eisenberg testified that the “A line apartments” in the building contain the same number rooms except for apartment 12A. The Rent Roll Report, Ex. 2, shows that “the lowest rent charged for a rent-stabilized apartment with the same number of rooms in the same building on the relevant base date” was $1,799.52 per month for apartment 9A. Thornton v. Baron, 5 N.Y.3d at 181 n.1. Although the limitation on damages retroactively to 2007 for overcharges that began in 2005 produces a windfall to defendant, that windfall reflects a legislative balancing between awarding full compensation and affording a point of repose. See Regina Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, __ N.Y.3d __, slip op. at 18, 45; Adjler v. Province of Mendoza, 33 N.Y.3d 120, 130 n.6 (2019). Use of the default formula is not the product of any legislative balancing. Given the comprehensive reliable evidence in the record enabling a determination that the legal regulated rent as of May 20, 2007, was $5,174.81 per month, use of $1,799.52 per month dictated by the default formula for plaintiff’s apartment containing eight rooms would produce an unwarranted windfall to plaintiff here. Grimm v. State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 N.Y.3d at 367; Thornton v. Baron, 5 N.Y.3d at 181; Altschuler v. Jobman 478/480, LLC., 135 A.D.3d at 440. Application of the default formula is warranted when the rental history is unreliable. 333 E. 49th Partnership, LP v. New York State Div. of Hous. & Community Renewal, 165 A.D.3d at 106 Altschuler v. Jobman 478/480, LLC., 135 A.D.3d at 440. Were the court to apply the default formula, however, the court simply would substitute the $1,799.52 for the $5,174.81 per month in the calculations set forth above, apply the $625.00 IAI increase, and apply the annual or biannual RGBO increases authorized for the renewal leases or the renewal periods when no lease was executed. V. RENT OVERCHARGE The RSL, N.Y.C. Admin. Code §26-516(a) (2018), mandated a two-step inquiry when evaluating a rent overcharge claim. First, Administrative Code §26-516(a) (2018) required the fact finder to determine whether defendant landlord “collected an overcharge above the rent authorized for a [rent stabilized] housing accommodation.” Second, assuming that the landlord collected an overcharge, the statute set forth the potential bases on which damages are to be calculated, including the presumption that damages be trebled. The statute also authorized the assessment of attorneys’ fees and costs for the action, N.Y.C. Admin. Code §26-516(a)(4), and injunctive relief. N.Y.C. Admin. Code §26-516(e). A. AMOUNTS THAT PLAINTIFF WAS CHARGED AND THAT HE PAID To determine whether a landlord “collected an overcharge above the rent authorized,” N.Y.C. Admin. Code §26-516(a) (2018), the court must assess and compare (1) “the rent authorized,” which the statute defines as an apartment’s “legal regulated rent”; (2) the amount of rent that the landlord actually charged; and (3) the amount of rent that the tenant actually paid. Based on the evidence adduced at trial, that assessment and comparison are as follows. Plaintiff’s ledger shows a partial history of the monthly rents defendant charged between January 1, 2005, and April 30, 2019, Ex. 3, listing rents charged that are not fully consistent with the amounts specified in plaintiff’s leases: another indication of defendant’s arbitrary, unexplained setting of rents. The amount charged were: (1) $8,750.00 per month from January 1, 2005, through December 31, 2006; (2) $9,150.00 per month from January 1, 2007, through March 31, 2010; (3) $8,750.00 per month from April 1, 2010, through April 30, 2011; (4) $9,150.00 per month from May 1, 2011, through October 31, 2011; (5) $9,355.00 per month from November 1, 2011, through October 31, 2012; (6) $9,543.00 per month from November 1, 2012, through October 31, 2013; (7) $10,282.58 per month from November 1, 2013, through January 1, 2016; (8) $10,284.90 per month from February 1, 2016, through October 31, 2017 (the additional $11.60 charge is listed as a “retro MCI” rent increase); (9) $10,490.60 per month from November 1, 2017, through September 30, 2018; and (10) $10,500.92 per month from October 1, 2018, through April 30, 2019 (the additional $10.32 charge is listed as an “MCI arrear” rent increase). Id. Plaintiff’s partial history also lists the monthly rental payments plaintiff made between January 1, 2005, and April 30, 2019. Ex. 3. His payments corresponded to the amounts charged rather than the amounts specified in his leases, until August 2015 when he began paying less because he believed he had been overcharged previously. He paid: (1) $8,750.00 per month between January 1, 2005, and December 31, 2006; (2) $9,150.00 per month between January 1, 2007, and January 31, 2010; (3) $8,750.00 per month between February 1, 2010, and October 31, 2011; (4) $9,355.88 per month between November 1, 2011, and June 30, 2014; (5) $10,282.58 per month between July 1, 2014, and July 31, 2015; (6) $1,551.40 per month between August 1 and November 30, 2015; (10) $3,102.80 in December 2015; (11) $3,448.60 in January 2016; and (12) $5,000.00 per month between February 1, 2016, and April 30, 2019. A landlord is liable for a rent overcharge where the landlord has charged, and a tenant has paid, in excess of the “legal regulated rent” for the tenant’s apartment. N.Y.C. Admin. Code §26-516(a) (2018). Since plaintiff’s tenancy commenced February 1, 2005, defendant has submitted monthly rent bills to him for amounts far in excess of apartment 7A’s “legal regulated rent.” Plaintiff largely paid those amounts until 2015, when he unilaterally began to pay roughly half of what he was charged. Ex. 3. The obvious disparity between the rental amounts charged, the rental amounts paid, and apartment 7A’s “legal regulated rent” at least until 2015 renders defendant liable for collecting rent overcharges from plaintiff. Having found defendant liable to plaintiff, the court turns to the second set of calculations that the RSL, N.Y.C. Admin. Code §26-516(a) (2018), requires to arrive at the assessment of damages. B. DAMAGES The RSL, N.Y.C. Admin. Code §26-516(a)(2) (2018), provided that “no determination of overcharge and no award or calculation of an award of the amount of an overcharge may be based upon an overcharge having occurred more than four years before the complaint is filed.” “No penalty of three times the overcharge may be based upon an overcharge having occurred more than two years before the complaint is filed” upon overcharges willfully collected by the landlord. Id. Because plaintiff filed his complaint May 20, 2011, the recoverable damages from the overcharge claim must be calculated from May 20, 2007. Administrative Code §26-516(a) (2018) presumed that treble damages are to be assessed on the monetary recovery of all rent overcharges, unless “the owner establishes by a preponderance of the evidence that the overcharge was not willful.” 1. Monetary Recovery of Overcharges The comparison between apartment 7A’s legal regulated rent and the rental amounts that plaintiff paid based on defendant’s charges since May 20, 2007, yields the following overcharges, assuming plaintiff’s $5,000.00 per month payments have continued through May 2020: 2007 — legal regulated rent = $36,223.67 legally collectible ($5,174.81/month x 7 months June-December 2007) amount paid = $64,050.00 ($9,150.00/month x 7 months) annual overcharge = $27,826.33 ($64,050.00 paid — $36,223.67 legally collectible) 2008 — legal regulated rent = $62,097.72 legally collectible ($5,174.81/month x 12 months) amount paid = $109,800.00 ($9,150.00/month x 12 months) annual overcharge = $47,702.28 ($109,800.00 paid — $62,097.72 legally collectible) 2009 — legal regulated rent = $64,659.29 legally collectible ($5,174.81/month for January 2009 and $5,407.68 x 11 months February-December 2009) amount paid = $109,800.00 ($9,150.00/month x 12 months) annual overcharge = $45,140.71 ($109,800.00 paid — $64,659.29 legally collectible) 2010 — legal regulated rent = $66,676.69 legally collectible ($5,407.68 for January 2010 and $5,569.91/month x 11 months February-December 2010) amount paid = $109,800.00 ($9,150.00/month x 12 months) annual overcharge = $43,123.31 ($109,800.00 paid — $66,676.69 legally collectible) 2011 — legal regulated rent = $67,465.53 legally collectible ($5,569.91/ month x 9 months January-September 2011 and $5,778.78/month x 3 months October-December 2011) amount paid = $106,211.76 ($8,750.00/month x 10 months January-October 2011 and $9,355.88/month x 2 months November-December 2011) annual overcharge = $38,746.23 ($106,211.76 paid — $67,465.53 legally collectible) 2012 — legal regulated rent = $69,576.52 legally collectible ($5,778.78/month x 10 months January-October 2012 and $5,894.35/month x 2 months November-December 2012) amount paid = $112,270.56 ($9,355.88 x 12 months) annual overcharge = $42,694.04 ($112,270.56 paid — $69,576.52 legally collectible) 2013 — legal regulated rent = $71,645.82 legally collectible ($5,894.35/month x 10 months January-October 2012 and $6,351.16/month x 2 months November-December 2012) amount paid = $112,270.56 ($9,355.88/month x 12 months) annual overcharge = $40,624.74 ($112,270.56 paid — $71,645.82 legally collectible) 2014 — legal regulated rent = $76,213.92 legally collectible ($6,351.16/month x 12 months) amount paid = $117,830.76 ($9,355.88/month x 6 months January-June 2014 and $10,282.58/month x 6 months July-December 2014) annual overcharge = $41,616.84 ($117,830.76 paid — $76,213.92 legally collectible) 2015 — legal regulated rent = $76,467.96 legally collectible ($6,351.16/month x 10 months January-October 2015 and $6,478.18/month x 2 months November-December 2015) amount paid = $81,286.46 ($10,282.58/month x 7 months January-July 2015, $1,551.40/month x 4 months August-November 2015, and $3,102.80 for December 2015) annual overcharge = $4,818.50 ($81,286.46 paid — $76,467.96 legally collectible) 2016 — legal regulated rent = $77,738.16 legally collectible ($6,478.18/month x 12 months) amount paid = $58,448.60 ($3,448.60 for January 2016 and $5,000.00/month x 11 months February-December 2016) annual underpayment = $19,289.56 ($77,738.16 legally collectible — $58,448.60 paid) 2017 — legal regulated rent = $77,997.28 legally collectible ($6,478.18/month x 10 months January-October 2017 and $6,607.74/month x 2 months November-December 2017) amount paid = $60,000.00 ($5,000.00/month x 12 months) annual underpayment = $17,997.28 ($77,997.28 legally collectible — $60,000 paid) 2018 — legal regulated rent = $79,292.88 legally collectible ($6,607.74/month x 12 months) amount paid = $60,000.00 ($5,000.00/month x 12 months) annual underpayment = $19,292.88 ($79,292.88 legally collectible — $60,000 paid) 2019 — legal regulated rent = $79,623.26 legally collectible ($6,607.74/month x 10 months January-October 2019 and $6,772.93/month x 2 months November-December 2019) amount paid = $60,000.00 ($5,000.00/month x 12 months) annual underpayment = $19,623.26 ($79,623.26 legally collectible — $60,000 paid) 2020 — legal regulated rent = $33,864.65 legally collectible ($6,772.93 per month x 5 months) amount paid = $25,000.00 ($5,000.00/month x 5 months) underpayment through May 2020 = $8,864.65 ($33,864.65 legally collectible — $25,000 paid) Total rent overcharges to date: $332,292.98 Total rent underpayments to date: $ 85,067.63 Total net rent overcharges: $247,225.35 Were the court to use the default formula, the court would substitute the legal regulated rent determined by the default formula of $1,799.52 starting in 2007, apply the same $625.00 IAI increase, and apply the same authorized annual or biannual RGBO increases. 2. Treble Damages Based on Willfulness The RSL, N.Y.C. Admin. Code §26-516(a) (2018), also presumed that a landlord found to have collected a rent overcharge is liable for a monetary judgment of three times the total overcharge and placed the burden of proof on the landlord to establish “by a preponderance of the evidence that the overcharge was not willful.” Although plaintiff repeatedly claimed treble damages in his closing arguments, defendant did not address the issue, even though the statute places the burden of proof on an overcharging landlord to disprove willfulness by a preponderance of the evidence. Based on the willful acts in defiance of the RSL and RSC delineated above, coupled with the absence of any evidence that defendant’s collection of an overcharge from plaintiff was not willful, defendant failed to meet its burden to rebut the willfulness of its overcharge. This action draws the sharp distinction between landlords that relied on DHCR’s misguidance and a landlord that knowingly chose to violate the law by keeping deregulated an apartment that the law required to be regulated, for reasons unrelated to DHCR’s misguidance. Defendant thus is subject to the penalty of treble damages for the rent overcharges collected from May 20, 2009, through July 31, 2015. Administrative Code §26-516(a)(2) (2018), which limits treble damages retroactive to “two years before the complaint,” prescribes the starting date. Plaintiff’s rent underpayments beginning in August 2015 prescribe the ending date. The overcharges subject to treble damages for that period total: 2009 — legal regulated rent = $37,853.76 legally collectible ($5,407.68 x 7 months June-December 2009) amount paid = $64,050.00 ($9,150.00/month x 7 months) overcharge = $26,196.24 ($64,050.00 paid — $37,853.76 legally collectible) 2010 — annual overcharge = $43,123.31 2011 — annual overcharge = $38,746.23 2012 — annual overcharge = $42,694.04 2013 — annual overcharge = $40,624.74 2014 — annual overcharge = $41,616.84 2015 — legal regulated rent = $44,458.12 legally collectible ($6,351.16/month x 7 months January-July 2015 amount paid = $71,978.06 ($10,282.58/month x 7 months January-July 2015) overcharge = $27,519.94 ($71,978.06 paid — $44,458.12 legally collectible) Total rent overcharges June 2009 — July 2015: $260,539.34 Thus twice the amount of overcharges for that period, $521,078.68, must be added to the $260,539.34 in overcharges for that period. After adding the earlier two years of overcharges not subject to treble damages ($27,826.33 in 2007 + $47,702.28 in 2008 + $18,944.47 in January-May 2009) and crediting plaintiff’s underpayments to defendant ($19,289.56 in 2016 + $17,997.28 in 2017 + $19,292.88 in 2018 + $19,628.26 in 2019 + $8,864.65 in January-May 2020) set forth above, the total net overcharges for May 2007 through May 2020 without any trebling were $247,225.35. When $521,078.68 is added to that total, plaintiff is entitled to a judgment against defendant for rent overcharges of $768,303.93 ($247,225.35 + $521,078.68). 3. Interest The RSL, N.Y.C. Admin. Code §26-516(a)(4) (2018), provided that judgments for rent overcharges must include “interest from the date of the overcharge at the rate of interest payable on a judgment,” which is 9 percent per year. C.P.L.R. §5004. “Where such damages were incurred at various times, interest shall be computed upon each item from the date it was incurred or upon all of the damages from a single reasonable intermediate date.” C.P.L.R. §5001(b). Although November 2013 is the intermediate month of the combined overcharges and underpayments, given that the overcharges are much higher and over a much longer and less recent period than the underpayments, a more reasonable intermediate date, closer to the median, from which interest shall run on the total net overcharges and trebled overcharges is January 1, 2012. Therefore plaintiff is entitled to a judgment against defendant for $768,303.93 with interest at 9 percent per year from January 1, 2012. C.P.L.R. §§5001(b), 5004. C. COSTS AND ATTORNEY’S FEES The RSL, N.Y.C. Admin. Code §26-516(a)(4) (2018), also provided that a landlord found to have collected a rent overcharge “may be assessed the reasonable costs and attorney’s fees of the proceeding.” See C.P.L.R. §8101. Plaintiff’s leases further provide for defendant’s recovery of attorneys’ fees and expenses incurred due to plaintiff’s breach of the lease, implying plaintiff’s reciprocal right to recover attorneys’ fees and expenses incurred due to defendant’s breach of the lease. N.Y. Real Prop. Law §234; Graham Ct. Owner’s Corp. v. Taylor, 24 N.Y.3d 742, 747 (2015); 251 CPW Hous. LLC v. Pastreich, 124 A.D.3d 401, 403-404 (1st Dep’t 2015). Because compliance with the RSL is an implied covenant in plaintiff’s leases, plaintiff is entitled to attorneys’ fees and expenses due to defendant’s violation of the RSL based on New York Real Property Law §234 as well. Paganuzzi v. Primrose Mgt. Co., 268 A.D.2d 213, 213 (1st Dep’t 2000). The complaint includes a claim for attorneys’ fees and costs. Having prevailed on his claim, plaintiff is entitled to his reasonable costs and attorney’s fees incurred in this action. C.P.L.R. §8101; N.Y. Real Prop. Law §234; N.Y.C. Admin. Code §26-516(a)(4) (2018); Graham Court Owner’s Corp. v. Taylor, 24 N.Y.3d at 748; 251 CPW Hous. LLC v. Pastreich, 124 A.D.3d at 403-404. Therefore the court refers the calculation of “reasonable costs and attorney’s fees” in this action, N.Y.C. Admin. Code §26-516(a)(4) (2018), to a Special Referee to hear and determine. C.P.L.R. §4317(b). D. ANCILLARY INJUNCTIVE RELIEF The RSL, N.Y.C. Admin. Code §26-516(e) (2018), provided that: “Violations of this law, or of the code…may be enjoined by the supreme court….” The complaint also includes a claim for an injunction requiring defendant to register apartment 7A with DHCR as a rent stabilized unit at the legal regulated rent. Pursuant to the RSL, N.Y.C. §26-517(e) (2018), defendant must file amended DHCR registration statements for apartment 7A that reflect all the corrected legal regulated rents specified above. Administrative Code §26-516(e) thus entitles plaintiff to the injunction he requests as follows. (1) Defendant shall file amended rent registration statements with DHCR for apartment 7A for 1999 to 2020 that reflect the apartment’s legal regulated rent for each of those years as set forth in this decision. (2) Defendant shall provide to plaintiff a rent stabilized lease for apartment 7A that recites the apartment’s current monthly legal regulated rent as $6,772.93, which will endure through the end of the current lease renewal period on October 31, 2021. VI. DISPOSITION Based on the findings and conclusions delineated above: The Clerk of the Court shall enter a judgment in favor of plaintiff Thomas Sandlow and against defendant 305 Riverside Corp. a/k/a 305 Riverside Dr. Corporation in the amount of $768,303.93, with interest at the statutory rate of 9 percent per year from January 1, 2012. Defendant shall: (1) File amended rent registration statements with the New York State Division of Housing and Community Renewal for apartment 7A, 305 Riverside Drive, New York, New York, for 1999 through 2020 that reflect the apartment’s legal regulated rent for each of those years as set forth in this decision, and (2) Provide to plaintiff a rent stabilized lease for apartment 7A that lists the apartment’s current monthly legal regulated rent as $6,772.93, which will endure through the end of the current lease renewal period on October 31, 2021. The court severs plaintiff’s claim for attorney’s fees and costs and refers the issue of reasonable attorney’s fees and court costs that plaintiff may recover against defendant to a Special Referee to hear and determine. Within 30 days after entry of this order, plaintiff’s attorney shall serve the order with notice of entry and a completed Information Sheet on the Special Referee Clerk in the General Clerk’s Office, Room 119, 60 Centre Street, who shall place the severed claim on the calendar of the Special Referee’s Part for the earliest convenient date. Dated: May 15, 2020