Landlord Didn't Make Good Faith Overcharge Refund
LVT Number: #31598
Tenant complained in 2017 of rent overcharge and improper deregulation of his apartment. In response, landlord acknowledged that tenant was rent stabilized, reduced tenant's rent, and issued an overcharge refund. The DRA ruled for tenant and found the total overcharge was $4,918, including triple damages. The amount due tenant was $3,170 since landlord already had refunded $1,748. The DRA's determination of the apartment's legal rent included addition of a rent increase for individual apartment improvements (IAIs) when tenant moved in.
Landlord and tenant both appealed. Tenant objected to the IAI rent increase, arguing that landlord and its contractor shared an identify of interest. Landlord argued that there should be no triple damages for willful rent overcharge because the DHCR's "safe harbor" rule applied at the time landlord gave tenant a timely overcharge refund before answering tenant's complaint.
The DHCR ruled against landlord and for tenant. Landlord failed to rebut proof of an equity interest and/or identity of interest existing between landlord and its contractor. This relationship was found in documents submitted to the DHCR as well as public records. Landlord and the contractor also shared corporate officers and the same mailing address. As a result, the DHCR revoked the entire IAI increase. The total amount due to tenant, with triple damages and minus the prior refund, was $38,992. The DHCR upheld the triple damages award, finding that landlord didn't make a good faith attempt to issue a timely refund. Landlord didn't reduce the legal rent to the proper level when answering the overcharge complaint. And landlord retained overcharges even before the DHCR eliminated the IAI rent increase on appeal.
Bernal/165 Seaman LLC: DHCR Adm. Rev. Docket Nos. JP410006RO, JP410037RT (7/7/21)[9-pg. document]