Rent Reduction Order Froze Collectible Rent at Preferential Rent

Rent-stabilized tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $12,880, including triple damages. Landlord appealed and lost. Landlord argued that the DRA applied the wrong base rent date and failed to consider that the building was purchased at a judicial sale. The DHCR noted that the DRA did consider that due to a regulatory agreement with the Attorney General, tenant had accepted a rent credit through April 2014. So the DRA used April 2014, rather than December 2011, as the base date for calculating the overcharge. The first overcharge found was in December 2015, well after the date of the building's judicial sale. Landlord admitted that a rent reduction order had frozen the legal regulated rent at $1,139 and argued that tenant never paid more than that amount. But tenant paid a preferential rent of $900 per month when the rent was frozen by the prior order. So the collectible rent was frozen at $900. The judicial sale didn't prevent landlord's responsibility for the overcharge in this case. Even if landlord didn't have actual notice about the prior rent reduction order, it should have conducted due diligence and stopped overcharging tenant. So landlord was responsible for the overcharge.

Sheridan 1511 LLC: DHCR Adm. Rev. Docket No. GQ610049RO (5/1/19) [5-pg. doc.]