Landlord Can Offset $7,800 Rent Arrears from $147K Overcharge Refund

LVT Number: #31807

The DHCR's Tenant Protection Unit (TPU) filed a rent overcharge complaint in 2017 on tenant's behalf, claiming that the apartment's legal registered rent wasn't fully substantiated after a TPU audit investigation. The DRA ruled for tenant and ordered landlord to refund $147,795, including triple damages and interest.

The DHCR's Tenant Protection Unit (TPU) filed a rent overcharge complaint in 2017 on tenant's behalf, claiming that the apartment's legal registered rent wasn't fully substantiated after a TPU audit investigation. The DRA ruled for tenant and ordered landlord to refund $147,795, including triple damages and interest.

Landlord appealed and lost. Landlord argued that: (1) it bought the building in 2015 and never received notice of the TPU audit; (2) the base date assigned to the case should be later than 2013; (3) individual apartment improvements (IAIs) therefore occurred before the base date and weren't reviewable without a colorable claim of fraud; and (4) the DRA should have subpoenaed IAI records from prior landlord.

But the DHCR served the TPU's audit determination on landlord in 2017. The filed overcharge complaint also was served on landlord. IAIs completed before tenant's occupancy on April 1, 2014, were within the applicable four-year review period. The overcharge occurred both before after landlord bought the building and there was no claim of a judicial sale that would have relieved current landlord's liability for the overcharge. Landlord also never claimed until it filed a PAR that tenant had rent arrears of $7,856, even when the DRA sent landlord a final notice of triple damages. So the DHCR couldn't consider this claim on appeal. However, nothing prevented landlord from offsetting the overcharge damages with rent arrears tenant owed.

5511-777 St. Marks Ave Bk LLC: DHCR Adm. Rev. Docket No. JP210012RO (12/21/21)[4-pg. document]

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