New Landlord Not Liable for Overcharge Collected by Prior Landlord

Tenant complained of a rent overcharge. The DRA ruled for tenant and ordered a refund of $4,000. Landlord appealed. Landlord was a bank that had taken over the building through a foreclosure sale. Landlord claimed that it wasn't responsible for overcharges collected by prior landlord. The DHCR ruled for landlord. New York City's Rent Stabilization Code provides that an owner who purchases at a judicial sale isn't responsible for a prior landlord's overcharges. While there is no similar clause in the Tenant Protection Regulations, DHCR has power to apply this rule here as a matter of policy. A public foreclosure sale is similar to a judicial sale, and landlord was responsible only for overcharges it collected.

Madison: DHCR Adm. Rev. Dckt. No. HG710133RO (5/27/99) [4-pg. doc.]