Lucas A. Ferrara in the New York Times, Real Estate Section, HOW ‘PREFERENTIAL’ ARE SOME RENTS?, July 13, 2008

By Jay Romano

Q.  I just moved into an apartment and signed a lease for $1,850. Someone told me that I may be paying a “preferential rent,” so I looked again at the documents. The lease was on a form used for rent-stabilized tenants, and there was a section saying that the “market rate” was $2,009 a month.

Do I have rent-stabilized status? What can the landlord legally do in terms of raising the rent when the lease is up for renewal?

A.  Lucas A. Ferrara, a Manhattan real estate lawyer and adjunct professor of law at New York Law School, said a “preferential rent,” which is a reduced rent charged to a regulated tenant, can be temporary or permanent, depending on the language in the lease.

If temporary, the landlord may impose a higher rent -- that is, the legal regulated rent plus any allowable increase -- at the time of lease renewal. If permanent, the landlord can base increases only on the preferential rent.

It is not clear from the letter whether the writer is rent-stabilized, Mr. Ferrara said. If the legal rent for a vacant apartment is $2,000 or more, the apartment may be deregulated.

“The fact that the landlord is stating that the ‘market rate’ for the apartment is $2,009 a month seems to indicate that the apartment has been deregulated,” Mr. Ferrara said. “And if the apartment has been deregulated, using a rent-stabilized lease form, or charging less than $2,000 a month, doesn’t resubject the apartment to regulation.”

Mr. Ferrara said that if the apartment is not regulated, the landlord can charge as much or as little as he or she wishes -- subject to any terms in the lease that deal with increases -- when the lease expires.

The writer can determine the regulatory status of the apartment by calling the State Division of Housing and Community Renewal at (718) 739-6400.