Rent Overcharge Resulted from Pre-Base Date Rent Reduction Order

Rent-stabilized tenant complained of rent overcharge. The DRA ruled for tenant based on a pre-base date rent reduction order, which froze the collectible rent on the base date until landlord filed for and obtained a rent restoration from the DHCR. The total rent overcharge that the DRA found was $50,075, including interest. But current landlord was ordered to refund $175 since it bought the building at a judicial sale.

Tenant appealed and lost. Tenant then filed an Article 78 court proceeding, claiming that the DHCR's decision was arbitrary and unreasonable. The court sent the case back to the DHCR to reconsider the question of whether triple damages should apply.

The DHCR then ruled for tenant. The rent charged on the March 12, 2008, base rent date was $988 per month. On May 30, 2011, prior landlord took title to the building by foreclosing on a mezzanine loan. Prior landlord then sold the building to current landlord on Nov. 6, 2013. The outstanding rent reduction order, issued on Sept. 16, 1988, reduced the rent to $550 per month. A 2013 rent restoration application filed by the prior landlord was denied. Tenant also acknowledged in 2014 receiving a $50,075 refund without triple damages from landlord after the DRA sent landlord a triple damage notice. Notably, the DHCR's Case Status printout stated that the service reduction complaint was "closed" and that, while there was a related case, the disposition of that case was listed only as "other." So, prior landlord couldn't reasonably have been expected to know that the rent was required to be frozen due to a service reduction order issued in 1988, at least until tenant filed his complaint. But, since notice was given with the complaint, triple damages applied. The total overcharge, with triple damages, was $96,000 minus the $50,075 already refunded.

Carrion: DHCR Adm. Rev. Docket No. ES410005RP (1/16/18) [8-pg. doc.]