DHCR Must Consider Subtenant's Triple Damages Claim

Facts: Sublessor belonged to an informal cooperative organization that owned a building for a number of years. Sublessor paid a preferential rent of $225 per month. In 2004, the group took steps to formalize cooperative ownership, but the attorney general rejected their offering plan. In the meantime, sublessor rented an apartment to subtenant in 2002 and charged him at least $900 per month. Subtenant complained to the DHCR of a rent overcharge. The DHCR ruled for subtenant and found that the overcharge was willful. Sublessor appealed. He said he thought the apartment was exempt from rent stabilization. He claimed he spent $14,000 improving the apartment before subtenant moved in. Court: The case must go back to the DHCR to reconsider whether the overcharge was willful. The DHCR had argued that, under Rent Stabilization Code Section 2525.6(b), any overcharge of a subtenant by a tenant is deemed willful and triple damages must be awarded. But the Rent Stabilization Law states that if an owner shows that an overcharge wasn't willful, he pays back only the overcharge with interest, not triple damages. The law doesn't authorize a Code provision that would bar a sublessor from trying to prove an overcharge wasn't willful. So the Code provision is invalid, and the DHCR must reconsider sublessor's claims.

Gboizo v. DHCR: NYLJ, 2/8/06, p. 18, col. 1 (Sup. Ct. NY; Lehner, J)