Landlords Must Refund $210,000 to Tenant

Tenant filed a rent overcharge complaint with the DHCR pursuant to a series of orders issued in a case before the State Supreme Court. The DRA ruled for tenant and ordered landlord to refund over $210,000, including triple damages and interest. Landlord and prior landlord appealed, claiming that no overcharge was collected because the legal regulated rent was an issue in the court case and no one know what the legal regulated rent was until the appeals court ruled in December 2006. Landlords also pointed out that tenant withheld rent from May 2003 until June 2006 and that all overcharges were refunded to tenant in June 2006. Landlords argued that there was no willful overcharge and that no interest should be charged because a refund was issued shortly after the lower court ruled in June 2006.
The DHCR ruled against landlords. The DRA properly imposed triple damages. The appeals court had ruled that tenant's overcharge claim should be decided by the DHCR and set the base rent date as Jan. 31, 1998, four years before tenant raised the overcharge issue in court. The court also ruled that the overcharge would be determined under the DHCR's default method because landlords produced no base date rent history records. Because the default method was used, there is a presumption of willful overcharge, and triple damages were correctly applied. In addition, the court found that landlord had given tenants fraudulent leases.

Apthorp Associates, LLC/390 West End Avenue, LLC: DHCR Adm. Rev. Docket No. VI410001RO (2/27/08) [3-pg. doc.]