Failure to Comply with 2008 Rent Reduction Order Led to $155,000 Rent Overcharge

Rent-stabilized tenant complained of rent overcharge based on an outstanding rent reduction order. The DRA ruled for tenant and ordered landlord to refund $154,957, including triple damages and interest. Tenant's rent had been frozen at $773.88 per month effective in 2008 following the rent reduction order that landlord hadn't complied with.

Landlord appealed and lost, claiming that triple damages shouldn't have been imposed because the overcharge wasn't willful. Landlord said that it bought the building in 2014 and didn't receive a copy of the rent reduction order from the prior owner. Landlord also argued that, under RSC Section 2526.1(f)(2), where sufficient records weren't provided upon sale of the building, the new landlord wasn't responsible for overcharges by the prior owner, or for triple damages. 

The DHCR pointed out that in 2010 New York's highest court ruled in Cintron v. Calogero that a rent reduction order imposed a continuing obligation on an owner not to increase a tenant's rent until a rent restoration order was issued to lift the rent freeze. And lack of knowledge of a prior rent reduction order wasn't a defense in a rent overcharge case. The new landlord was responsible for obtaining rent records and becoming knowledgeable about agency orders affecting a building upon purchase. The Rent Stabilization Code section that landlord cited shielded a current owner from liability only if a property had been purchased out of bankruptcy or a judicial sale. It didn't apply to this case. RSC Sections 2526.1(a)(1) and 2526.1(f)(1) made a current owner responsible for refunding a rent overcharge determined after purchasing the building.

COB 3420 Broadway, LLC: DHCR Adm. Rev. Docket No. MR410019RO (11/19/24)[2-pg. document]