Interest Revoked on Portion of Rent Overcharge Refunded Before DHCR Ruling Issued

Rent-stabilized tenant complained to the DHCR of rent overcharge. The DRA ruled for tenant, finding that landlord collected $3,500 per month for 18 months when the legal rent was $2,903. The DRA directed landlord to refund $24,962 to the tenant, based on the overcharge plus triple damages and interest, minus a prior $10,823 refund.

Landlord appealed, claiming that interest shouldn't have been imposed since landlord made the $10,823 refund in January 2018 while the complaint was pending.The DHCR ruled against landlord, who then filed an Article 78 court appeal of DHCR's decision.

The court ruled that "interest may not be retroactively calculated on amounts that have been paid." So, the court sent the case back to the DHCR for a ruling in accordance with CPLR Section 5001, calculating interest only on the balance of the overcharge remaining as of January 2018 ($508.51). The DHCR then recalculated the refund due to tenant on the remaining overcharge amount of $508.51 as of January 2018, with interest accrued up to the issuance date of the DRA's order. The total refund due was now $756.41.

68 Montague Street, LLC: DHCR Adm. Rev. Docket No. MV210002RP (1/14/25)[2-pg. document]