DHCR Has No Authority to Forgive Back Rent Owed by Tenant

Facts: Tenant filed a fair market rent appeal in 1990, challenging the first rent-stabilized rent for her apartment. Five years later, the DRA ruled for tenant, reducing her monthly rent from $830 to $557. Landlord appealed. The case was sent back to the DRA, which ruled for landlord and increased the fair market rent to $798, based on 1997 changes to the Rent Stabilization Law. Landlord appealed again. The DHCR ruled for landlord and set the fair market rent at $1,078, which was more than tenant paid. The DHCR further ruled that tenant didn't have to pay landlord $19,000 in back rent that was now owed as a result of the DHCR's final ruling. The DHCR found that it would be a hardship for tenant to make her pay the back rent. Landlord appealed, claiming that the DHCR's decision was arbitrary and unreasonable. The court and appeals court ruled for landlord. The DHCR then appealed to New York's highest court.

Court: Landlord wins. Although two judges on the panel disagreed, the court ruled that the DHCR had no authority under any law or regulation to forgive rent arrears. And landlord had given tenant several renewal leases indicating that it intended to collect the rent stated in the lease in the event that it eventually won the case. There also was no proof that tenant was unable to pay the back rent without hardship.

IG Second Generation Partners, LP v. DHCR: NYLJ, 5/7/08, p. 27, col. 1 (Ct. App.; Pigott, J, Kaye, CJ, Graffeo, Smith, Jones, JJ)