Triple Damages Revoked Upon DHCR Reconsideration

Tenant complained of rent overcharge. Landlord claimed that tenant's apartment was deregulated by a prior high-rent vacancy. The DHCR ruled for tenant, found she was rent stabilized, and ordered landlord to refund $115,000, including triple damages. Landlord appealed, claiming that the DHCR's decision was unreasonable.

The court sent the case back to the DHCR for reconsideration. In the meantime, tenant moved out of the apartment in May 2010. On remand, landlord argued that the DHCR mistakenly used a lower, preferential rent as the legal base date rent instead of the higher legal regulated rent. Landlord also claimed that the DHCR incorrectly calculated tenant's legal garage rent.

The DHCR ruled for landlord in part. The DRA correctly calculated the base date legal rent as $1,219 and properly included a garage rent of $63 in the base rent. There was no proof that the base date rent cited by the DRA was a preferential rent. There was no preferential rent rider in the base date lease, and it wasn't indicated in the annual rent registration for that year. Because the base date rent included the garage rent, landlord wasn't permitted to remove the garage rent from the base date rent and then add to tenant's vacancy rent a much higher free market garage rent for another space. The DHCR has applied a free market garage rent rule only where the garage rent was separate from the apartment rent. In a separate decision, the DHCR denied landlord's application to sever the garage rent.

However, landlord showed that the overcharge wasn't willful. Although landlord hadn't checked the preferential rent box on its 2002 rent registration, it did list two rents. And although, as ruled, the longevity increase collected should have been based on 10 years, not 11 years as claimed by landlord, the DHCR had never previously ruled on whether a period of less than a full year qualified for a further longevity increase. The "1/40th" increase collected by landlord was supported by cost documentation.

Landlord's mistaken calculation of tenant's garage rent also wasn't a willful overcharge. Landlord also attempted to refund the overcharge while the case was pending. The total overcharge was reduced to $52,000, with interest.

Executive Towers at Lido, LLC: DHCR Adm. Rev. Docket No. ZB710001RP (12/5/13) [8-pg. doc.]