On-Time Discount Rent Clause Is Invalid

Tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $13,919, including interest. The DRA found that: (1) the building was receiving J-51 tax benefits; (2) tenant was rent stabilized; (3) tenant's lease or leases contained a discounted rent provision; (4) this discounted rent wasn't a preferential rent; (5) the higher rent amount on the lease was an illegal late fee; (6) landlord may demand a late fee of up to only 5 percent of the rent being charged and paid; and (7) landlord couldn't enforce a lease clause providing that it could end a preferential rent or discounted rent by a certain day of the month.

Landlord appealed and won, in part. Landlord claimed that the discount clause wasn't illegal. The DHCR found that the DRA properly invalidated the on-time discount rent clauses in tenant's leases. But the total amount of the overcharge calculation was reduced because tenant hadn't paid rent for some months. [Download PDF of decision here.]

Prospect Partners, LLC: DHCR Adm. Rev. Docket No. FM210060RO (11/1/18) [3-pg. doc.]