Collecting a Year's Rent in Advance Is Rent Overcharge

Rent-stabilized tenant complained of a rent overcharge. The DRA ruled against tenant. Tenant’s apartment was either vacant or owner occupied on the base date, so it was temporarily exempt and the next rent collected was the legal regulated rent. Tenant appealed. The DRA had ignored the portion of her complaint stating that landlord forced her to pay a full year’s rent in advance at the time she moved in. Landlord claimed that the advance payment was voluntary and didn’t constitute an overcharge. The rent payments were made by check from tenant’s employer.

The DHCR ruled for tenant. Tenant paid $15,000 in advance for the first year’s rent. Tenant then paid the next six months in advance at $7,500. She claimed that it wasn’t voluntary, and tenant’s lease stated that tenant “shall” pay the first year’s rent in advance. Collection of more than the first month’s rent plus one month’s security deposit was a rent overcharge. The DRA ordered landlord to refund interest in the amount of $7,000 to tenant for advance payment of rent from June 2005 through October 2009. Since tenant owed more than that in back rent, landlord could give tenant a credit toward arrears instead of a refund.

Pachelli: DHCR Adm. Rev. Docket Nos. XJ410058RT (12/21/09) [4-pg. doc.]