New Landlord Liable for Overcharge

Facts:Tenant complained of a rent overcharge. The DHCR ruled for tenant but found that prior landlord was solely responsible for refunding the overcharge under Rent Stabilization Code Section 2526.1(f)(2) because current landlord bought the building in 1994 in a foreclosure sale. Tenant appealed. He claimed that while landlord submitted proof of purchase at a foreclosure, he didn't show that he didn't get records from which he could set the rents. Courts:Tenant wins. The foreclosure sale exemption from liability for rent overcharge is based on two factors that there's no collusion between prior and current landlords and that rent records weren't available at the time of sale. In this case, the DHCR didn't look at the second factor. The case was sent back for the DHCR to consider whether the records new landlord got at the foreclosure sale were sufficient for landlord to have set legal rents.

Grimm v. DHCR: NYLJ, 1/9/02, p. 18, col. 3 (Sup. Ct. NY; Friedman, J)