Prior Landlord Must Reimburse New Landlord for Overcharge Amount

Facts: Prior landlord rented a rent-stabilized apartment to subtenant through an illusory tenant. Subtenant filed a rent overcharge complaint with the DHCR but moved out before it was decided. Prior landlord also sold building to new landlord before the DHCR's order was issued. New landlord refunded the overcharge to subtenant and sued prior landlord for reimbursement. Prior landlord claimed that the contract for sale of the building barred new landlord's claim. Court: New landlord wins. New landlord showed that she wasn't involved in the fraudulent creation of an illusory tenancy that led to the overcharge finding, that she was liable to tenant under the Rent Stabilization Law, and that she had paid tenant the overcharge amount determined by the DHCR. And the contract of sale didn't bar new landlord's claim for indemnification from prior landlord.

Helfand v. Sessler: Index No. 35583/02 (Civ. Ct. NY 5/28/03; Smith, J) [6-pg. doc.]