Landlord Avoided Triple Damages by Timely Overcharge Refund
LVT Number: #31708
Rent-stabilized tenant complained to the DHCR of rent overcharge and improper apartment deregulation in 2016. Landlord answered that it reasonably believed the apartment had been vacancy deregulated before tenant moved in based on a rent increase for individual apartment improvements (IAIs). But, since landlord realized it didn't have sufficient proof of the IAI costs, it consented to rent stabilization coverage, reduced tenant's rent, and refunded $55,255 to tenant within the time permitted by the DRA to respond to tenant's complaint.
Tenant appealed, and the DHCR issued an order in 2020 sending the case back to the DRA for further consideration based on enactment of HSTPA on June 14, 2019. HSTPA amended various rent overcharge provisions of the rent stabilization law to expand overcharge liability. But while the remanded case was pending, New York's highest court ruled in Regina Metro. Co. v. DHCR that HSTPA improperly made these provisions retroactive.
The DHCR again ruled against tenant and dismissed his PAR. Landlord had filed annual rent registrations for the apartment from 2013 to 2017, and thereafter, while the case was pending before the DRA. HSTPA didn't eliminate lawful vacancy and longevity increases that became effective before June 14, 2019. And because landlord issued a refund during the time permitted at the time under DHCR Policy Statement 89-2, no triple damages were warranted. Tenant argued for the first time on remand that landlord had committed fraud, requiring a further lookback period. But no one disputed that landlord had performed IAIs to the apartment in 2012. The fact that landlord didn't have sufficient proof of payment proved overcharge, but not rent fraud.
Keenan: DHCR Adm. Rev. Docket No. IS410003RK (8/31/21)[7-pg. document]