Tenant Gets Four Years to Pay Back Rent

Facts: Rent-stabilized tenant filed a fair market rent appeal in 1990. In 1995, the DRA ruled for tenant and reduced his initial rent. Landlord appealed. In 2000, the DHCR ruled for landlord in part and increased tenant’s initial rent somewhat. Tenant then filed an Article 78 petition. The DHCR asked to take the case back for reconsideration. The court allowed this. In 2004, the DHCR again ruled in part for landlord because 2000 amendments to the Rent Stabilization Code by then allowed consideration of more comparable rents. But to avoid hardship to tenant, the DHCR canceled $19,000 of back rent owed by tenant as a result of its new order. Landlord then appealed. The court and appeals court ruled for landlord, and the case again was sent back to the DHCR. The DHCR ruled that tenant must pay over $20,000 of back rent owed, but gave tenant four years to do so in installment payments. Landlord then appealed, claiming that the DHCR’s decision was arbitrary and unreasonable.

Court: Landlord loses. It was reasonable for the DHCR to give tenant time to pay the back rent now owed as a result of the agency’s final order. It wasn’t landlord or tenant’s fault that the case took so long to decide. Tenant’s understanding that he could eventually be required to pay a higher rent must be weighed against landlord’s agreement to accept lower rent payments in the meantime. The DHCR also properly denied landlord’s request for interest on the back rent. There was no provision in the Rent Stabilization Law or Code imposing interest on back rent. And there was no clause in tenant’s lease allowing interest to be collected on rent arrears.

IG Second Generation Partners LP v. DHCR: NYLJ, 2/25/09, p. 29, col. 3 (Sup. Ct. NY; Kornreich, J)