New Landlord Responsible for Willful Rent Overcharge Based on Prior Rent Reduction Order

Rent-stabilized tenant complained to the DHCR on June 25, 2019, of rent overcharge. The DRA ruled for tenant and ordered a refund of $50,869, including triple damages, for overcharges occurring between 2015 and 2023. The overcharge was caused by landlord's failure to lower and freeze the rent in compliance with a separate DHCR rent reduction order.

Landlord appealed and lost. Landlord argued that there was no willful overcharge because it bought the building in July 2022 and didn't know about the rent reduction order. Landlord also pointed out that the key fob system that was the subject of the rent reduction order no longer existed, and that a partial refund had been made to tenant before the DRA's order was issued.

The DHCR upheld the DRA's finding of willful overcharge. When tenant's overcharge complaint was filed, post-HSTPA, a voluntary refund no longer rebutted the presumption of willful overcharge and didn't eliminate the triple damages penalty. And new owners of a building were responsible for obtaining records at closing that included apartment rental histories. The fact that landlord wasn't aware of the outstanding rent reduction order when it bought the building wasn't a defense. And that fact that the condition that led to the rent reduction had been fixed or eliminated wasn't a basis for finding non-willfulness absent a DHCR order actually restoring the legal rent.

NYC Ming & Qiu, LLC: DHCR Adm. Rev. Docket No. MU210003RO (1/23/25)[2-pg. document]