Tenant Must Reimburse Landlord for Underpayments

Facts: Tenant moved into an apartment in 1968. During that year, the apartment was exempted from rent control due to tenant's mixed residential/commercial use. In 1983 the apartment was declared subject to rent stabilization, and tenant complained of a rent overcharge. The DRA ruled that landlord had overcharged tenant between 1970 and 1986 and directed a $16,000 refund. Landlord appealed. In response to landlord's appeal, the DHCR ruled that tenant's apartment didn't become subject to rent stabilization until 1974. This changed the amount of the overcharge. Landlord owed tenant only $8,000. And, since the DHCR had taken five years to decide landlord's appeal, tenant had been paying a lower rent than the rent that was determined to be the legal rent for the apartment. The DHCR calculated the difference and ruled that tenant must pay that amount to landlord. Tenant appealed, and the court revoked the DHCR's order. The court restored the DRA's original ruling. The DHCR then appealed. Court: Landlord wins. The DHCR's order wasn't arbitrary or capricious, and the lower court had no valid reason to revoke it. The DHCR acted within its authority in modifying the overcharge determination---even if it resulted in tenant's having to reimburse landlord for underpayments.

Meyer v. NYS DHCR: NYLJ, p. 22, col. 2 (4/15/93) (App. Div. 1 Dept.; Carro, JP, Milonas, Ellerin, Kupferman, Rubin, JJ)