Appeals Court Upholds DHCR's Decision that On-Time Discounted Rent Was Improper Late Charge

Rent-stabilized tenant complained of rent overcharge. The DHCR ruled for tenant, finding that an on-time discounted rent provided for in tenant's lease wasn't a preferential rent but instead amounted to an unenforceable late charge. The DHCR therefore deemed the lower on-time discounted rent to be the legal regulated rent. Landlord then filed an Article 78 court appeal, claiming that the DHCR's decision was arbitrary and unreasonable. The court ruled for landlord and sent the case back to the DHCR for reconsideration. The DHCR appealed and won. The appeals court found that the DHCR's decision had a rational basis and wasn't arbitrary and capricious. In general, the court found that it must defer to the DHCR's rational interpretation of its own regulations in its area of expertise.

Kings Park 148, LLC v. DHCR: Index No. 7058/19, App. No. 2020-08340, 2025 NY Slip Op 00863 (App. Div. 2 Dept.; 2/13/25; Iannacci, JP, Chambers, Warhit, Golia, JJ)