Recitation, as required by CPLR § 2219(a), of the papers considered in the review of this petition:

Upon foregoing cited papers in this CPLR article 78 proceeding, petitioner 602 44 Realty LLC (the petitioner) seeks a review of a determination of a Deputy Commissioner of the New York State Division of Housing and Community Renewal (DHCR), dated June 6, 2025 (the PAR Denial Order), which denied a petition for administrative review and upheld a determination of a Rent Administrator (RA), dated July 20, 2024 (RA Order), finding that petitioner overcharged rent, directed the petitioner to refund the overcharged rent to the NYCHA as the Section 8 rent administrator, awarded the tenant interest and treble damages, and directed the petitioner to pay interest and treble damages to the tenant. The DHCR opposes.

The petitioner is the current owner-landlord of the subject building, having acquired it on January 17, 2013. On December 20, 2016, one of the building tenants — Jeannette Colon (the [*2]tenant) — filed a rent-overcharge complaint with the DHCR under Docket No. EX210065R. The tenant complained of a rent overcharge from and after December 20, 2012, as determined by the DHCR by way of the four-year look-back period. On April 13, 2017, the petitioner filed its answer, alleging that: (1) it acquired the subject building on January 17, 2013; (2) its predecessor-in-title provided it only limited rent records; and (3) the subject building was a free market building and not subject to the DHCR's jurisdiction because it had been substantially rehabilitated. The DHCR received the tenant's response and answer on February 20, 2018 and April 30, 2018, respectively.

On June 8, 2018, the petitioner, in essence, counterclaimed by filing an exemption application with the DHCR under Docket No. GR 210005 UC. The RA granted the petitioner's exemption application by Order and Determination, dated December 2, 2020. Thereafter, tenant filed a Petition for Administrative Review on behalf of herself and other tenants challenging the aforementioned Order and Determination. On March 26, 2021, the DHCR Deputy Commissioner granted the tenant's PAR and remanded the petitioner's exemption application to the RA. On July 27, 2022, the RA issued an Order Pursuant to Remand which determined that the subject building was not exempt from regulation based on substantial rehabilitation. Thereafter, the petitioner filed a PAR of the remand order. On February 24, 2023, an Order and Opinion denied petitioner's PAR and affirmed the RA's finding on remand that the subject building was rent regulated and was not exempt by virtue of a substantial rehabilitation.

Having finished with the petitioner's exemption application under Docket No. GR 210005 UC, the parties returned to the tenant's original rent-overcharge complaint under Docket No. EX210065R. Therein, several requests for information were mailed to the tenant and the petitioner by the DHCR and were responded to by both sides. After considering the additional submissions, the RA (by way of the aforementioned RA order) calculated a total overcharge at $27,242.36, interest at $2,213.25, and the treble damages at $49,789.12, with the directives that the petitioner must refund the total overcharge amount of $27,242.36 to Section 8 — NYCHA, and further that the petitioner must refund the sum of $52,002.37 ($2,213.25 in interest, plus $49,789.12 in treble damages) to the tenant.

On September 11, 2024, the petitioner challenged the RA Order by way of the Owner's Petition for Administrative Review of the Order Finding Rent Overcharge. Therein, the petitioner principally contended that: (1) the RA improperly failed to take into account the tenant's 2013 and 2014 lease renewals;^[FN1] (2) the DHCR could not freeze the collectible rent based on the record; and (3) treble damages could not be imposed. On June 6, 2025, the DHCR Deputy Commissioner issued the aforementioned PAR Denial Order which upheld the RA Order in its entirety. The PAR Denial Order held, in relevant part, that: (1) the DHCR was justified in disregarding the 2013 and 2014 lease renewals because the tenant did not sign either of those leases; (2) the DHCR properly froze the rent during the relevant period; and (3) the DHCR [*3]properly imposed treble damages. On July 28, 2025, the petitioner timely commenced the instant CPLR article 78 proceeding. On November 17, 2025, the DHCR answered the petition. On December 3, 2025, the Court reserved decision.

In a CPLR article 78 proceeding, "[a] court cannot interfere with the decision of an administrative tribunal in a case . . . unless there is no rational basis for the exercise of discretion or the action complained of is arbitrary and capricious" (Matter of Kammerer v Crouchley, 205 AD2d 629, 629 [2d Dept 1994]). "Where a rational basis exists in the record to support a determination of the Division of Housing and Community Renewal . . . that determination will be sustained" (Matter of Jamaica Estates, LLC v New York State Div. of Hous. & Community Renewal, 78 AD3d 1053, 1054 [2d Dept 2010]). Where an administrative determination is "made by the agency responsible for the administration of the law, the court is not to substitute its judgment for that of the agency. Even though the court might have decided differently were it in the agency's position, the court may not upset the agency's determination in the absence of a finding . . . that the determination had no rational basis" (Matter of Mid-State Mgt. Corp. v New York City Conciliation & Appeals Bd., 112 AD2d 72, 76 [1st Dept 1985], affd for reasons stated below 66 NY2d 1032 [1985]). "Pursuant to 9 NYCRR 2526.1 (f) (2), a current owner is responsible for his [or her] own and his [or her] predecessors' overcharges and penalties under the Rent Stabilization Law" (DiMaggio v Division of Hous. & Community Renewal, 248 AD2d 533, 535 [2d Dept 1998]).

Under RSC § 2522.5(b), "[t]he owner shall furnish to the tenant signing a renewal lease form . . . a copy of the fully executed renewal lease form, bearing the signatures of the owner and tenant, and the beginning and ending dates of the lease term, within 30 days from the owner's receipt of the renewal lease form signed by the tenant. . . . In addition to any other penalties provided under this code, noncompliance by the owner within 20 days of such order shall result in the denial of any rent guideline increases for vacancy or renewal leases until the fully executed copy of the vacancy lease or renewal lease form is furnished by the owner to the tenant" (emphasis added).

The DHCR had a rational basis to find that neither the 2013 nor the 2014 lease renewals were executed by the tenant. In particular, the 2013 lease renewal had the signature of someone other than the tenant, whereas the 2014 lease renewal bore only the tenant's initials. The DHCR reviewed all of the tenant's signed leases in the record and determined that the 2014 lease renewal did not bear the tenant's signature, as the signature therein in the form of her initials was distinct from her confirmed signatures which (without fail) consisted of her first and last name written out in full. With respect to the subject lease renewals, the petitioner contends (as it did before the DHCR) that: (1) the petitioner exchanged the executed lease renewals with the tenant; (2) the tenant was put on notice of the subject lease renewals (3) the NYCHA as her Section 8 rent administrator approved the rent increases in the lease renewals; and (4) the tenant and NYCHA each made their full respective payments under the subject lease renewals.

As noted, the DHCR rejected petitioner's first contention that the 2013 and 2014 lease renewals were validly executed by the tenant. In support of the petitioner's remaining contentions, petitioner relies on RSC § 2523.5 (c) (2). That statute provides, in relevant part, that:

"Where the tenant fails to timely renew an expiring lease or rental agreement offered pursuant to this section, and remains in occupancy after expiration of the lease, such lease or rental agreement may be deemed to be in effect, for the purpose of determining the rent in an overcharge proceeding, where such deeming would be appropriate pursuant to Real Property Law section 232-c. In such event, the expiring lease will be deemed to have been renewed upon the same terms and conditions, at the legal regulated rent, together with any guidelines adjustments that would have been applicable had the offer of a renewal lease been timely accepted. Unless otherwise dictated by Real Property Law section 232-c, the effective date of the rent adjustment under the 'deemed' renewal lease shall commence on the first rent payment date occurring no less than 90 days after such offer is made by the owner" (emphasis added).^[FN2]

The DHCR previously considered and rejected the petitioner's reliance on the aforementioned statute. Although RSC § 2523.5 (c) (2) provides that "[a] lease or rental agreement may be deemed to be in effect, for the purpose of determining the rent in an overcharge proceeding" (emphasis added), it does not mandate that the RA must do so.

Petitioner's reliance on Matter of Admin. Appeal of 3103 Realty LLC (Admin. Rev. Docket No. CO-210006-RO [Nov. 25, 2014]) and Matter of Admin. Appeal of Steven B. Feldman. (Admin. Rev. Docket No. ZH-410013-RT [Mar. 18, 2014]), is unavailing. Both decisions make it clear that the deeming action under RSC § 2523.5 (c) (2) is not mandatory, but is subject to the RA's exercise of discretion, which is precisely what the RA did here.

Petitioner's failure to register the subject apartment's rent triggered the application of RSC § 2528.4. That statute provides, in relevant part, that:

"The failure to properly and timely comply with the rent registration requirements of this Part shall, until such time as such registration is completed, bar an owner from applying for or collecting any rent in excess of: the base date rent, plus any lawful adjustments allowable prior to the failure to register. . . . The late filing of a registration shall result in the elimination, prospectively, of such penalty, and for proceedings commenced on or after July 1, 1991, provided that increases in the legal regulated rent were lawful except for the failure to file a timely registration, an owner, upon the service and filing of a late registration, shall not be found to have collected a rent in excess of the legal regulated [*4]rent at any time prior to the filing of the late registration" (emphasis added).

It is undisputed that petitioner failed to register the subject apartment's rent until March 5, 2024. Notwithstanding its belated registration of the subject apartment's rent, petitioner contends that: (1) the DHCR could not freeze the rents for the subject apartment because the annual registrations have actually been filed; (2) the rent-freeze provisions cannot be applied in the absence of intentional misconduct; and (3) the pendency of an administrative appeal in the petitioner's proceeding under Docket No. GR210005UC stayed the rent-registration requirement.

RSC § 2528.4 makes it clear that the failure to "properly and timely" comply with the registration requirement results in the rent being frozen at the amount of the legal regulated rent in effect on the date of the last preceding registration statement (emphasis added). "Owners who fail to register are precluded from taking certain rent increases on the rent-stabilized accommodation until they properly file a registration" (Matter of LL 410 E. 78th St. LLC v Division of Hous. & Community Renewal, 44 NY3d 232, 238 [2025]). As the PAR Denial Order explained (at page 3) in that regard:

"The RA was correct to freeze the collectible rent of $2,088.21 per month. Pursuant to RSC §2528.4 as it applies to this proceeding, the penalty for failure to register is to freeze the rent. Such freeze is not dependent on whether the failure to register is intentional. Rent overcharges resulting from such a freeze can be eliminated by a late registration of the missing registrations prior to issuance of the RA[ ] Order as long as, during the time of the freeze, the [petitioner] charged a monthly rent that was 'lawful except for the failure to file a timely registration. . . .' Here, however, the [petitioner] was charging a rent above the legal collectible rent, which was an unlawful rent, during the time of the rent freeze because the increases in the legal regulated rent during this time, and the rents charged and collected during this time, were more than the collectible rent. Accordingly, because the rent during the rent freeze was unlawful not only based on the [petitioner's] 'failure to file' timely registrations, such rent freeze was properly not lifted retroactively by the RA upon filing of the late registrations. It is noted that the rent freeze for failure to register was lifted prospectively upon the [petitioner's] filing of the missing registrations in March of 2024" (emphasis added).

Thus, based upon the totality of the record, a rent freeze was properly imposed (see Matter of 215 W 88th St. Holdings LLC v NY State Div. of Hous. & Community Renewal, 143 AD3d 652, 653 [1st Dept 2016] [RSC § 2528.4 "makes no allowance for circumstances such as a successor owner's good faith or reliance on agency determinations in its favor that are later rescinded"]).^[FN3]

Contrary to the petitioner's contention, the DHCR had a rational basis for (and was not arbitrary or capricious in) its rejection of the petitioner's arguments that the latter was under no obligation to file registration statements during the pendency of the tenant's appeal in the petitioner's proceeding under Docket No. GR210005UC. The pendency of the appeal in the petitioner's proceeding was irrelevant — insofar as the subject tenant was concerned — because the order on appeal in the petitioner's proceeding specifically excepted the subject tenant (as well as other tenants) from its reach for so long as no "Notice of Tax Abatement" was included with the subject tenant's (as well as other tenants') initial and/or renewal leases. It is critical that the petitioner provided no evidence either to the RA or the DHCR that any of the subject tenant's leases/renewals included a "Notice of Tax Abatement." Because no requisite notice was included with any of the subject tenant's leases/renewals, the subject apartment remained rent-stabilized, even during the pendency of the tenant's appeal in the petitioner's proceeding under Docket No. GR210005UC.

The DHCR's failure to consider Matter of Aaron Lord, Docket No. IS-210038-RK (Jan. 26, 2021), which was miscited by the petitioner in its submissions to the DHCR, is not fatal to its determination. In Matter of Aaron Lord (unlike the instance here), the owner had valid leases supporting the rent increases, with the only defect being a failure to register. Here, however, the rent increases charged by the petitioner to the tenant during the rent-freeze years were unlawful because the underlying lease renewals for those years were invalid on account of the tenant's failure to execute them. Because the underlying lease renewals were invalid, the petitioner had no legal basis to collect the increased rent during those years. Accordingly, the DHCR's ruling that the petitioner failed to show that the rent for the subject apartment during the rent-freeze period was "lawful except for the failure to file," was not arbitrary.^[FN4]

Pursuant to RSL § 26-516,

"[A]ny owner of housing accommodations who, upon complaint of a tenant . . . is found by the . . . [DHCR], after a reasonable opportunity to be heard, to have collected an overcharge above the rent authorized for a housing accommodation subject to this chapter shall be liable to the tenant for a penalty equal to three times the amount of such overcharge. . . . If the owner establishes by a preponderance of the evidence that the overcharge was not willful, the state division of housing and community renewal shall establish the penalty as the amount of the overcharge plus interest" (emphasis added).

Under the statute, "a rent overcharge is presumed willful, and warrants a treble damages award . . . , unless the owner establishes by a preponderance of the evidence that the overcharge was not willful" (Paulonis v 287 Assoc., L.P., 198 AD3d 664, 666 [2d Dept 2021] [emphasis added]).

Here, two of the documents in the rental history of the subject apartment provided by the petitioner were fraudulent, as determined by the DHCR. The 2013 lease renewal was signed by [*5]the initials JC, whereas the tenant demonstrated to the DHCR's satisfaction that she never signed any of her lease documents with her initials. In addition, the 2014 lease renewal was not signed by the tenant or by any other occupant of her apartment.^[FN5] Therefore, the tenant was considered a month-to-month occupant from December 20, 2012 (which was the four-year look-back base date) through December 31, 2014, and the petitioner was not entitled to (but nonetheless did) increase her rent during that period. Moreover, the subject apartment was belatedly registered with the DHCR on March 5, 2024 for calendar years 2013 through 2022. Further, the DHCR's determination that the petitioner failed to establish the prior owner's claimed improvements with adequate documentation had a rational basis and was not arbitrary and capricious. The petitioner's belief that the subject building was exempt from rent registration on the basis of the prior owner's alleged substantial rehabilitation was unfounded because no filings to that effect had been made with the New York City Department of Buildings. Under these circumstances, the DHCR was not required to establish that the petitioner engaged in a fraudulent scheme. In sum, DHCR's Deputy Commissioner rationally determined in the PAR Denial Order that the petitioner failed to establish by a preponderance of the evidence that the overcharge was not willful (see East Riv. Group, LLC v New York State Div. of Hous. & Community Renewal, 244 AD3d 851 [2d Dept 2025]; Matter of Sha Realty, LLC v New York State Div. of Hous. & Community Renewal, 193 AD3d 864, 866 [2d Dept 2021]; Matter of South Lexington Assoc., LLC v New York State Div. of Hous. & Community Renewal, 170 AD3d 733, 735 [2d Dept 2019]; Matter of JP & Assoc. Corp. v New York State Div. of Hous. & Community Renewal, 122 AD3d 740, 741 [2d Dept 2014]; Matter of Metropolitan 118-80 Ltd. Partnership v New York State Div. of Hous. & Community Renewal, 83 AD3d 944, 944 [2d Dept 2011]; Matter of Obiora v NY State Div. of Hous. & Community Renewal, 77 AD3d 755, 756 [2d Dept 2010]; Matter of 508 Realty Assoc., LLC v New York State Div. of Hous. & Community Renewal, 61 AD3d 753, 755 [2d Dept 2009]; Matter of Marlin Realty v New York State Div. of Hous. & Community Renewal, 42 AD3d 501, 502 [2d Dept 2007]).

Accordingly, it is

ORDERED that the instant CPLR article 78 petition is denied, and this proceeding is dismissed without costs or disbursements; and it is further

ORDERED that the DHCR's counsel is directed to electronically serve a copy of this Decision and Judgment with notice of entry on the petitioner's counsel, and by first-class mail, return-receipt requested on the subject tenant Jeanette Colon, 602 44th Street, Apt. 3-J, Brooklyn, New York 11220, and on the Section 8 Voucher Administrator New York City Housing Authority, Leased Housing Department, Brooklyn Customer Contact Center, 787 Atlantic Avenue, Second Floor, Brooklyn, New York 11238, with a notation on the front of [*6]the envelope to NYCHA "Re: Section 8/Voucher #0536620," and to electronically file an affidavit of service with the Kings County Clerk.

The foregoing constitutes the Decision and Judgment of this Court.

"Where a tenant whose term is longer than one month holds over after the expiration of such term, such holding over shall not give to the landlord the option to hold the tenant for a new term solely by virtue of the tenant's holding over. In the case of such a holding over by the tenant, the landlord may proceed, in any manner permitted by law, to remove the tenant, or, if the landlord shall accept rent for any period subsequent to the expiration of such term, then, unless an agreement either express or implied is made providing otherwise, the tenancy created by the acceptance of such rent shall be a tenancy from month to month commencing on the first day after the expiration of such term."