The petitioner rented a rent-stabilized apartment from the Marrones. The rent paid by
the prior tenant—$831.20 per month—was predicated upon a configuration
of the apartment as a two-bedroom unit. Although two additional bedrooms had been
added to the subject unit before the Marrones purchased the building, the Marrones had
sealed off the doorway to those rooms and the rooms were not rented or used. When the
petitioner rented the apartment, the Marrones, at her request, unsealed the doorway,
performed electrical work to rewire the extra bedrooms so that they would be on the
electric meter for the subject unit, and rented the unit to the petitioner as a four-bedroom
apartment. The Marrones charged the petitioner an initial rent of $1,200 per month.
The petitioner thereafter filed a rent overcharge complaint with the DHCR, and the
Rent Administrator, inter alia, determined that a rent overcharge had occurred. In so
concluding, the Rent Administrator rejected the Marrones' contention that they were
entitled to charge a first stabilization rent because the subject apartment had been
changed from a two-bedroom unit to a four-bedroom unit. On the Marrone's subsequent
petition for administrative review, the Deputy Commissioner, among other things,
affirmed the Rent Administrator's finding that the Marrones were not entitled to charge a
first stabilization rent, reasoning that because the Marrones had done no more than
unseal a doorway, they had not changed the perimeter of the apartment.
Upon reconsideration, the Deputy Commissioner adhered to the determination that
the Marrones were not entitled to a first stabilization rent. However, upon considering
the Marrones' argument that "justice required the permissible rent for a four-bedroom