Discounted Rent Is Legal Rent, Not Preferential Rent

Rent-stabilized tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $8,800, including triple damages. Landlord appealed and lost. Although tenant's May 2014 vacancy lease contained a higher legal regulated rent and a lower discounted rent, the DRA correctly determined that the discounted rent wasn't a preferential rent and that the $1,068 paid by tenant as the discounted rent became the legal rent. Amended DHCR Fact Sheet No. 40 clarifies DHCR policy concerning preferential rents. Among other things, landlord may collect no more than a 5 percent late rent payment fee, and preferential rents can't be terminated during a lease term. So the DHCR won't let landlord enforce a lease clause that provides that landlord may end tenant's preferential or discounted rent by a certain day of the month based on late payment. 

Hillside Park 168 LLC: DHCR Adm. Rev. Docket No. FO110034RO (11/14/17) [11-pg. doc.]