Triple Damages Didn't Apply to Overcharge Refunded in Response to Pre-HSTPA Complaint

Rent-stabilized tenant complained of a rent overcharge in 2018 that he argued resulted from landlord's claimed individual apartment improvement (IAI) costs. Landlord agreed there was an overcharge and refunded tenant $19,904 in response to the complaint. The DRA later sent landlord a final notice of triple damages based on a rent freeze in effect due to a rent reduction order that was in effect for several years. The DRA said that total overcharges were $93,802 including triple damages. In response, landlord refunded another $34,858 to tenant. The DRA then ruled for tenant, directing landlord to refund $106,486 minus the $54,762 refund already made.

Landlord appealed and won, claiming that triple damages shouldn't be applied in this case. The DHCR agreed. RSC Section 2526.1(a)(1) provides that, if a landlord showed that an overcharge wasn't willful, triple damages wouldn't apply. And DHCR Policy Statement 89-2 provides that a landlord who adjusts the rent and refunds overcharge and interest to a tenant within the time to answer an overcharge complaint proves a lack of willfulness. Here, landlord made a good faith attempt to calculate the overcharge and interest and issued a significant refund to tenant. Although a portion of the overcharge resulting from the prior rent reduction order wasn't initially addressed, the rent had been restored in 2017, so no actual rent adjustment was needed. Amendments to the rent overcharge triple damage provisions made by HSTPA didn't apply to this complaint since it was filed prior to June 14, 2019.

Marine Equities 101, LLC: DHCR Adm. Rev. Docket No. KT210015RO (1/23/23)[3-pg. document]