Rent-Controlled Tenant Gets Overcharge Award with Triple Damages

Landlord sued to evict rent-controlled tenant for nonpayment of rent. Tenant claimed rent overcharge and breach of the warranty of habitability. Tenant pointed to a 1976 DHCR rent reduction order. Landlord argued that the rent reduction order didn't mention tenant's apartment. But the DHCR had denied landlord's application to restore rent in 2009 and stated that the rent reduction order did apply to tenant's apartment. Landlord's PAR of the 2009 order was denied in 2011. The rent reduction order froze tenant's monthly rent at $241 from 1976 through March 2013, when the DHCR issued a rent restoration order.

As a result of the DHCR orders, landlord had overcharged tenant by $44,518. Tenant asked the court to apply triple damages to the overcharge. Landlord pointed out that it bought the building in a tax foreclosure sale and was unaware of the rent reduction order until 2011 and that the DHCR had granted MBR increases for tenant's apartment over the years. But MBR increases didn't preclude effectiveness of a rent reduction order. And once landlord was on notice in 2009 of the DHCR's application of the rent reduction order to tenant's apartment, any overcharge was willful.

The total rent overcharge, with triple damages, was $126,580. Prejudgment interest didn't apply to a rent overcharge under rent control, but post-judgment interest of $32,095 also was added. The court also gave tenant a 10 percent rent abatement based on conditions causing a breach of the warranty of habitability.

Graham Court Owners Corp. v. Thomas: Index No. 55744/2014, 2019 NY Slip Op 29030 (Cit. Ct. NY; 2/4/19; Stoller, J)