Landlord Must Refund $93,000 Overcharge Due to 1988 Rent Reduction Order

Rent-stabilized tenant complained of rent overcharge and claimed that a rent increase based on individual apartment improvements (IAIs) was improperly calculated. The DRA ruled for tenant and ordered landlord to refund $93,000, including interest. The overcharge was based on a rent freeze due to a 1988 rent reduction order that was still in place. The DRA found no willful overcharge and didn't assess triple damages.

Landlord appealed and lost. Landlord argued that the building was subject to rents set by HPD under a regulatory agreement and that rolling tenant's rent back to the 1988 level breached the owner's agreement with HPD. But the Regulatory Agreement with HPD stated that prior to its Jan. 12, 2006, commencement, landlord must register the current rent for each apartment in the building in accordance with DHCR rent registration procedures, that those rents would be deemed the initial legal regulated rents for purposes of rent stabilization, and that rents thereafter would be adjusted in accordance with rent stabilization. So it was reasonable for the DHCR to freeze tenant's rent at the $297 level collectable in 1988 rather than the $1,000 that would otherwise be the legal base date rent.

229 Street LLC: DHCR Adm. Rev. Docket No. FT210052RO (11/7/19) [4-pg. doc.]