On-Time Rent Payment Clause Was Invalid

Rent-stabilized tenant complained of rent overcharge in 2018, claiming that landlord's rent increases and claimed preferential rent were improper. The DRA ruled for tenant, finding that although the tenant's initial legal regulated rent was $1,637 per month, the $1,400 discounted rent charged and paid from Feb. 1, 2018, through Jan. 31, 2019, became the legal rent because landlord wasn't permitted to enforce a lease clause providing that it could end a preferential or discounted rent when tenant didn't pay that rent by a certain day of the month. THe DRA ordered landlord to refund $11,248 including triple damages.

Landlord appealed and lost. The DHCR pointed out that First and Second Dept. appeals court cases had upheld DHCR rulings that on-time discount clauses are invalid, that such rents are not preferential rents, and that the amount charged by landlord as set forth in the lease becomes the legal regulated rent. The DHCR reduced the total overcharge finding because tenant had moved out before the DRA ruling was issued. 

MDRJ, LLC: DHCR Adm. Rev. Docket No. MR610020RO (9/25/24)[6-pg. document]