Tenant Loses Five-Year Rent Overcharge Case

In a 7-0 ruling, the Court of Appeals, New York’s highest court, recently ruled that the tenant could not trigger a DHCR probe into improvements made at her apartment beyond the four-year time frame. The tenant had tried to invoke the Grimm decision to prove that the owner overvalued the cost of improvements he made to the six-story building in which she resided to inflate her unit’s rent.

In Grimm v. New York State Division of Housing and Community Renewal, the Court of Appeals had ruled that the DHCR or a court could ignore the four-year look-back period for rent overcharge claims where the tenant raises a "colorable" claim of fraud. In this case, however, the Court of Appeals stated that the tenant failed to set forth sufficient indications of fraud to warrant consideration of the rental history beyond the four-year statutory period.

The rental history revealed that the registered rent for the apartment was $572 in 2004, at which time a long-time tenant vacated the apartment. The owner then performed work in the unit, and in October of 2004 raised the stabilized rent to $1,750 per month. The tenant alleged in her overcharge complaint that the $1,750 rent could not be justified based on individual apartment improvements because the owner would have needed to spend $39,000 to justify that rent, and she estimated that, based on her research and calculations, the improvements could not have cost more than $5,000. The owner, in turn, did not specifically rebut the tenant's allegations or provide details as to the work performed.