Matter of Missionary Sisters of the Sacred Heart, Ill. v. New York State Div. of Hous. & Community Renewal

In Matter of Missionary Sisters of the Sacred Heart, Ill. v. New York State Div. of Hous. & Community Renewal (283 A.D.2d 284, 724 N.Y.S.2d 742 [1st Dept 2001], in which the Court rejected the Division of Housing and Community Renewal's (DHCR) position that a preferential rent, once granted, becomes the base rent for the entire term of the tenancy, on which all future rent increases are calculated. The DHCR had relied for its position on Rent Stabilization Code (9 NYCRR) 2521.2 (b), which then provided, "Where the legal regulated rent is established and a rent lower than the legal regulated rent is charged and paid by the tenant, upon vacancy of such tenant, the legal regulated rent previously established plus the most recent applicable guidelines increases . . . may be charged new tenant." In Missionary Sisters, the lease specifically limited the rent concession to the term of the lease. The Court held (at 286) that the above-cited section of the Code did not "dictate the exclusive point at which the legal regulated rent can be charged if a concession has been granted." The Court instead held that the language of the lease, limiting the rent concession to the particular lease term for the specific reason stated, controlled over the agency's interpretation of the regulation.