ENDING "PREFERENTIAL RENT" REQUIRES A HEARING

In Matter of Yitzhak "James" Pastreich v. New York State Div. of Hous. & Community Renewal, Pastreich sued his landlord to keep a "preferential rent" in place.

In 1991, Pastreich and his landlord entered into a lease which acknowledged that even though the monthly rent was $5,747.52, Pastreich only needed to pay $3,000, provided he accepted the apartment in "as is" condition. (The parties renewed this lease five more times, for two years each.)

In 2004, when the landlord refused to allow Pastreich to pay the reduced rent, the tenant filed a "rent overcharge complaint" with the New York State Division of Housing and Community Renewal (DHCR). And, interestingly, the DHCR denied the tenant's request as time-barred.

On review -- when a case was filed (pursuant to CPLR Article 78) -- the New York County Supreme Court agreed. But, on appeal, the Appellate Division, First Department, reversed and found DHCR should have conducted a hearing.

According to the AD1, since each subsequent renewal was based on the original 1991 "preferential rent," the underlying rate wasn't barred from review, particularly in view of the uncertainty as to that reduction's duration.

For some reason, we're thinking that's not the result this landlord would have preferred.

To download a copy of the Appellate Division's decision, please use this link: Matter of Yitzhak "James" Pastreich v. New York State Div. of Hous. & Community Renewal