If you are the first rent stabilized tenant in an apartment and you wish to challenge the rent, that rent challenge is called a fair market rent appeal (FMRA).

For example, if you moved into an apartment formerly occupied by a rent controlled tenancy, the apartment becomes decontrolled (unless you were a family member of the rent controlled tenant succeeding to the tenancy.) If that apartment is in a building built before January 1, 1974 containing six or more units, it becomes rent stabilized. The owner must register the unit with the NYS Division of Housing and Community Renewal (DHCR) by completing the Initial Apartment Registration, (DHCR Form RR-1) and must provide the tenant with a copy by certified mail.

If you wish to challenge the rent, your signing the lease at a particular rent amount does not prevent you from challenging the rent. Public policy consideration prevent a landlord from being able to use a lease provision to deprive you of any of the protections of the rent stabilization code. Therefore, you may file an FMRA.

It is important that the FMRA be filed within 90 days after the notice to the tenant of the initial legal registered rent. This notice is accomplished when the owner properly serves the tenant with the initial registration (DHCR Form RR-1) within ninety days of the commencement of the occupancy.

DHCR's procedure for determining FMRAs consists of averaging the greater of the maximum collectible rent or maximum base rent under rent control as adjusted by the Special Guidelines for determining Fair Market Rent Appeals promulgated each year by the NYC Rent Guidelines Board, with the rents of qualifying comparable apartments, updated if appropriate. To the average of these two factors, an adjustment is added for any new equipment installed in the apartment. The FMRA procedure is specifically described in Section 2522.3 of the Rent Stabilization Code.

Orders determining Fair Market Rent Appeals in which the legal rent is established at an amount lower than that being paid by the tenant usually direct the owner to make the refund of any excess rent to the tenant in cash, check, or money order. The owner may, however, credit the refund against future rents over a period of up to six months. If the required refund is greater than six months' rent, the tenant at his or her option may continue to credit the rent until the refund is fully credited, or request the owner to refund any balance outstanding at the end of the six-month period. Unlike "overcharge" cases, the penalties of treble damages and interest may not be imposed on an owner in Fair Market Rent Appeal cases."