Landlord's Unlawful On-Time Rent Provision Resulted in Willful Rent Overcharge

Rent-stabilized tenant complained to the DHCR in 2016 of rent overcharge based on a higher rent charged when tenant paid her monthly rent late. The DRA ruled for tenant and ordered landlord to refund $3,915, including triple damages.

Landlord appealed and lost. The DHCR agreed with the DRA's finding that the on-time rent discount provision of tenant's lease wasn't a preferential rent since the tenant here was "charged" a legal rent from which she could only escape by paying monthly rent early. A preferential rent, on the other hand, is invariable throughout a lease term, not depending on anything the tenant does or fails to do. Landlord's hybrid rental agreement was unrecognized by the Rent Stabilization Law or Code, under which the discounted rent can be removed for the entire balance of the lease term. That removable lower rent is not a preferential rent and an appeals court has referred to this practice as a "rent discount scheme" that was an "unconscionable late charge and penalty." Triple damages were properly assessed on this rent overcharge.

King's Park 148, LLC: DHCR Adm. Rev. Docket No. KX110001RO (2/21/23)[4-pg. document]