Landlord Who Refunded Overcharge Before Final Notice Avoids Triple Damages in Pre-HSTPA Case

Rent-stabilized tenant complained to the DHCR of rent overcharge in 2018. In July 2022, the DRA sent landlord a final notice that triple damages would be imposed on an overcharge of $8,748 based on incorrect rent increase calculations by landlord. Landlord responded that its vacancy increase error was inadvertent, and that it had recalculated the rent and given tenant a $10,800 refund in March 2020. Tenant cashed the check at that time. The DRA ruled against landlord and assessed triple damages because tenant had filed his complaint in August 2018, landlord delayed in answering various DRA requests for additional information, tenant moved out in August 2020, and landlord's response to the Final Notice of triple damages wasn't timely. The total overcharge with triple damages was $28,094, and landlord was directed to refund $17,287 in light of the prior refund. 

Landlord appealed and won, disputing the triple damages. Since the overcharge complaint was filed in 2018, pre-HSTPA rules applied. Under DHCR Policy Statement 89-2, in effect at that time, landlord could avoid triple damages by adjusting rent within the time afforded to furnish the DHCR with an initial response to the overcharge and submitting proof that a full refund was given to tenant. Although not refunded to tenant within the time to answer the complaint, landlord refunded the $10,800 to tenant in March 2020, well before the DRA sent the Final Notice concerning proposed triple damages in July 2022. Landlord made a good faith effort to calculate the overcharge and interest and issued a significant refund to tenant in accordance with the DHCR's then existing policy and regulations. After removal of the triple damages, landlord owed tenant a remaining refund of $2,100.

Sugaree Realty, LLC: DHCR Adm. Rev. Docket No. KU410017RO (12/8/22)[3-pg. document]