Landlord Who Timely Refunded Overcharge in Pre-HSTPA Proceeding Avoided Triple Damages

Rent-stabilized tenant in a building complained to the DHCR in 2017 of rent overcharge. He had moved into the unit in 1993 and claimed that he had been overcharged for 20 years. He also claimed that landlord had improperly deregulated the apartment and that landlord refused to renew his lease. The DRA ruled for tenant, finding that he was rent stabilized and setting the four-year base date at Dec. 18, 2013, when the rent was $1,608 per month. The total overcharge was $51,893 with triple damages and interest. But no refund was due because tenant had rent arrears totalling $111,521, and landlord had issued a refund to tenant in the amount of $25,227. The DRA also found that tenant had no lease from 2018 to 2023, the apartment was registered from 2014 through 2022, and the base rent for future rent increases was now $1,689. Landlord and tenant both appealed.

The DHCR ruled for landlord in part. Landlord argued that triple damages shouldn't apply, and that a rent increase should be granted for a lease renewal offered in 2018. The DHCR agreed, since landlord had issued a refund to tenant in response to the complaint and more than five years before the DRA decided the case. At that time, DHCR Policy Statement 89-2 gave landlord a "safe harbor" to avoid triple damages. The total overcharge, with interest, was reduced to $35,899. But the DHCR granted no rent increase for 2018 because, although landlord had offered a renewal lease, tenant didn't sign it and there was no proof to support deeming a lease at that point because tenant didn't pay any rent increase pursuant to the offered lease. 

The DHCR denied tenant's PAR. He argued there had been a fraudulent scheme to deregulate the apartment and that the base date was incorrect. Tenant claimed that J-51 tax benefits had expired in 1989 before he moved in and that landlord falsely claimed he was deregulated when he took occupancy in 1993. But the four-year base date in this case was correct. And landlord couldn't have attempted to fraudulently deregulate the apartment in 1993 because high-rent vacancy deregulation didn't exist until 1997. 

19 West 89th Street LLC/Cornine: DHCR Adm. Rev. Docket Nos. LU410018RO, LU410021RT (1/31/24)[6-pg. document]