DHCR Can't Forgive Back Rent Owed

Facts: Rent-stabilized tenant filed a fair market rent appeal in 1990. The DRA ruled for tenant and reduced his rent from $830 to $557. Landlord appealed. The DHCR ruled that the fair market rent was $798. The decision was appealed and the court sent the case back for further review by the DHCR. In its second PAR decision, the DHCR found that the fair market rent was $1,078. Since this was greater than what landlord charged tenant, the complaint was dismissed. This meant that tenant owed landlord $19,000 in back rent for the 10-year period between the date of the DRA's original ruling and the date the second PAR was decided. So the DHCR ruled that tenant didn't have to pay the back rent owed, since it would be a ''hardship.'' Landlord appealed. Court: Landlord wins. The DHCR has no authority to forgive back rent owed. When the case was sent back to the DHCR for reconsideration, the Rent Stabilization Code had been amended, so landlord could more easily prove comparable rents. The DHCR didn't claim that it would cause undue hardship to apply the new comparable rules. The DHCR also cited no prior case where it forgave back rent owed. And Rent Stabilization Code Section 2522.7, which allows the DHCR to consider the equities involved, only applied to an order setting the legal rent. It was arbitrary and unreasonable for the DHCR to rule that tenant didn't have to pay back rent owed.

IG Second Generation Partners LP v. DHCR: NYLJ, 2/23/05, p. 21, col. 1 (Sup. Ct. NY; Lehner, J)