Current Landlord Liable for Full Overcharge Amount

Landlord sued to evict tenant for nonpayment of rent for four months in 1995. Tenant presented a 1991 DHCR order finding a rent overcharge and ordering prior landlord to pay tenant $5,900. Prior landlord never refunded the overcharge and lost the building through foreclosure in 1993. Tenant had the right to offset the rent overcharge against his current rent or obtain a judgment. Landlord bought the building in 1994 and claimed it wasn't responsible for the overcharge. Under the rent stabilization code, current landlord is responsible for overcharges collected on or after April 1, 1984. But the code provides an exception for landlord who takes possession at judicial sales where there is no collusion or relationship between buyer and seller and no records were provided at the time of sale to establish the legal rent. The court ruled against landlord. The judicial sale exception didn't apply, given the facts of the case. The Federal Home Loan Mortgage Corp. might have been entitled to the exception when it took title in 1993 at a judicial sale. But landlord bought the building a year later with every opportunity to find out the rent status of the building through DHCR's records.

351 E. 152nd St. Assoc. v. Torres: NYLJ, p. 33, col. 1 (11/1/95) (Civ. Ct. Bronx; Martino, J)