A rent increase that exceeds allowable annual and banked amounts may be justified, even in the absence of an increase in operating and maintenance expenses, if it is established that the rent for a unit is significantly below those of comparable units in the same general area due to extraordinary circumstances. A Special Circumstances rent increase will be approved where the landlord proves that, because of a special relationship between the landlord and tenant, or due to fraud, mental incompetence or other extraordinary circumstances unrelated to market conditions, the initial rent on a unit was set very low or the rent was not increased or was increased only negligible amounts during the tenancy. The mere fact that a long-standing tenant is paying significantly less than market rent is not considered an extraordinary circumstance.
Before imposing a rent increase based on rents for comparable units, the landlord must first file a Special Circumstances Petition at the Rent Board and then issue a notice of rent increase to the affected tenants. The notice of rent increase can be served at any time after the petition is filed, even after the Rent Board issues a decision. However, if served before the petition is filed, the notice is void and cannot be the basis for a lawful rent increase.
The Special Circumstances Petition requires evidence of the rents for reasonably comparable units. Perfect comparability of units is not required. The length of occupancy of the current tenant, size and physical condition of the unit and building, and services paid for by the tenant are important, though not exclusive, factors in determining whether a unit is "comparable" to another. It is a good idea to talk to a Rent Board counselor prior to filing this type of petition.
Tenants may object to imposition of a Special Circumstances rent increase based on the landlord's failure to perform requested repair and maintenance that is required by applicable state and local law. Tenants can also defend the petition by proving that the initial base rent was not set low and/or was not set low due to special circumstances, as claimed by the landlord. If a tenant disagrees with the amount of the landlord's proposed rent increase, the tenant can provide his or her own evidence of rents for reasonably comparable units.
If a petition based on special circumstances is granted, the base rent will be reset to an amount determined by the Administrative Law Judge. Such a rent increase may be granted only one time during the tenancy and precludes the imposition of all annual rent increases, banked increases and operating and maintenance increases that the landlord could have imposed prior to filing the Special Circumstances Petition.
For more information, obtain the Special Circumstances Petition and read the filing instructions. The form is also available at our office.
Tags: Topic 323