Attorney's Fees Denied in DHCR Proceeding

Facts: Tenant complained of a rent overcharge and asked the DRA for attorney's fees. The DRA ruled for tenant in part, finding that there was an overcharge of $17,500 plus interest. But the DRA denied tenant's request for attorney's fees because tenant was represented by a legal services agency and didn't pay attorney's fees. Tenant appealed. Landlord argued against imposing attorney's fees. When tenant filed her overcharge complaint, landlord claimed that the building wasn't rent stabilized, because it contained only three apartments. Landlord had just bought the building. Another proceeding was then opened to determine the building's status. The DHCR ruled that the building was a horizontal multiple dwelling and, therefore, was rent stabilized. Based on that ruling, the DRA ruled that there had been an overcharge. DHCR: Tenant loses. Tenant wasn't entitled to attorney's fees, but for a different reason than the DRA found. Under the Rent Stabilization Code, attorney's fees can be awarded to tenants as an additional penalty. The code provision isn't intended merely to compensate tenant for attorney's fees paid. Prior landlord had separated another building from the building that landlord bought, and landlord didn't know that the building was rent stabilized. Landlord, therefore, shouldn't be penalized by having to pay tenant's attorney's fees.

Cirri: DHCR Adm. Rev. Docket No. UC410044RT (9/29/06) [3-pg. doc.]