DHCR Overcharge Proceeding Initiated by TPU Referral Was Proper

Rent-stabilized tenant complained to the DHCR of rent overcharge in 2016. The DRA ruled for tenant and ordered landlord to refund overcharges that included triple damages. The DHCR denied landlord's petition for administrative review (PAR). Landlord then filed an Article 78 court appeal of the DHCR's decision.

The court ruled against landlord, who appealed and lost. The questions considered by the court were whether the DHCR's ruling was made in violation of lawful procedure, was affected by an error of law, or was arbitrary and capricious or an abuse of discretion. Landlord argued that it was denied due process because the DRA initiated the overcharge proceeding based on a referral from the DHCR's Tenant Protection Unit (TPU). But the DHCR was authorized to do so and gave landlord reasonable notice of the overcharge complaint with a meaningful opportunity to respond. The DHCR's finding that landlord failed to prove its claimed individual apartment improvements (IAIs) with sufficient documentation had a rational basis and wasn't arbitrary and capricious. The DHCR also rationally determined that triple damages applied since landlord failed to prove that the overcharge wasn't willful.

Sha Realty v. DHCR: Index No. 2018-06670, 2021 NY Slip Op 02301 (App. Div. 2 Dept.; 4/14/21; Mastro, PJ, Austin, Miller, Connolly, JJ)