TPU Audit Led to Overcharge Finding of $87,000

In May 2015, the DHCR's Tenant Protection Unit (TPU) commenced an audit of an apartment rent in landlord's building and, as a result, directed landlord to adjust the legal regulated rent. When landlord didn't do so, TPU filed an overcharge complaint against landlord in March 2017.

The deed showed that landlord had bought the building while it was in foreclosure. The DRA advised landlord that a rent reduction order remained in full force and effect since 1993, and directed landlord to file a rent restoration application. The DRA also asked landlord to submit a full copy of the apartment lease in effect immediately prior to the rent reduction order. Based on June 2019 Rent Stabilization Law amendments to rent overcharge provisions under HSTPA, the DRA also applied a six-year base date to the overcharge complaint. The DRA ruled that prior landlord was responsible for the overcharge from March 2011 to May 2013 in the amount of $30,466, and that current landlord was responsible for the overcharge from June 2013 forward in the amount of $64,792. These amounts included interest but not triple damages.

Current landlord appealed, claiming that there was no basis to find an overcharge. Landlord pointed out that prior landlord and former tenants signed a so-ordered settlement agreement that restored the rent in 2008. Landlord also argued that the DRA incorrectly applied the six-year base date retroactively under HSTPA.

The DHCR ruled for landlord in part. The 2020 Regina court decision did limit the lookback period to four years except that the DHCR could look back and consider the rent reduction order. The DHCR also rejected landlord's claim that the rent was restored in the 2008 court settlement. That settlement didn't mention the DHCR docket number of the rent reduction order. But the overcharge was limited to the period between April 2013 and October 2019. The total overcharge with interest was $87,000. Current landlord was responsible for overcharges that occurred after purchasing the building in foreclosure.

716 Jefferson Ave LLC: DHCR Adm. Rev. Docket No. IR210014RO (10/21/20) [8-pg. doc.]