New Landlord Responsible for Rent Overcharge Judgment Against Prior Landlord

Rent-stabilized tenant sued prior landlord in 2010 for rent overcharge. In 2017, the court ruled for tenant and awarded him a money judgment representing the rent overcharge and attorney's fees. That decision was entered in the NY County Clerk's Office on Dec. 13, 2017. New landlord acquired the building in June 2018. The now former rent-stabilized tenant then sued new landlord, claiming new landlord was responsible for the prior landlord's overcharge. New landlord claimed that it didn't know about the overcharge judgment and asked the court to dismiss the case. 

The court ruled against new landlord, who appealed and lost. The appeals court held that the trial court properly denied the successor landlord's pre-answer motion dismiss. Under Rent Stabilization Code (RSC) Section 2526.1(f)(2), the new landlord is responsible for a prior landlord's rent overcharge, and landlord's pre-answer request to dismiss was properly denied. A purchaser is expected to do due diligence and discover what there is to be known at the time it buys a building. And carryover liability for rent overcharge has been imposed by courts, even before RSC Section 2526.1(f)(2) was promulgated. Landlord would have the opportunity to more fully raise its defense after answering tenant's court complaint.

LeBihan v. 27 Wash. Sq. N. Owner LLC: Index No. 153887/19, App. No. 15929, Case No. 2021-02169, 2022 NY Slip Op 03447 (App. Div. 1 Dept.; 5/26/22; Gisch, JP, Scarpulla, Mendez, Shulman, Higgitt, JJ)