Rent Frozen by Rent Reduction Order Issued Under Rent Control

Rent-stabilized tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $56,000, including triple damages. Landlord appealed and won, in part. The overcharge finding resulted from a rent reduction ordered issued in 1996 when the apartment was under rent control. That order reduced the legal rent by $18 per month. Landlord argued that the transfer of the apartment from rent control to rent stabilization relieved landlord of any obligation to comply with the rent reduction order. Landlord also claimed that the rent reduction wasn't for an essential service and therefore didn't freeze the rent.

But the DRA correctly froze the rent since landlord had a continuing obligation to freeze the rent-stabilized rent until landlord obtained a DHCR rent restoration order, regardless of the fact that the rent control rent would not have been frozen. However, the overcharge wasn't willful because tenant's complaint was filed before the court ruled in the Cintron case that the DHCR could consider older rent reduction orders in calculating rent overcharge and because landlord had a reasonable belief that the rent reduction order didn't apply in this case because the apartment changed from rent control to rent stabilization. Triple damages were revoked, and the total overcharge finding, with interest, was reduced to $28,500.

3940 Carpenter Avenue Owner LLC: DHCR Adm. Rev. Docket No. AQ610024RO (9/10/14) [3-pg. doc.]