Landlord Permitted Illegal Apartment Sublet to Continue

Thirteen subtenants filed separate rent overcharge complaints with the DHCR. They claimed that they had rented rooms in an apartment where the tenants were Esko Management Corp. and Mei Huo. The apartment had four rooms, and the subtenants had paid more than the apartment's legal registered rent. The subtenants also claimed that landlord also was responsible for the overcharges because this was an illusory prime tenancy.

Landlord claimed that it wasn't responsible, that it collected no rent from the subtenants, and that it discovered the sublets only when the tenants stopped paying rent and it inspected the apartment.

The DRA ruled for subtenants, and found both the tenants and landlord responsible for the overcharges, which totalled almost $227,000, including triple damages.

Landlord appealed and lost. Landlord had constructive knowledge of the illusory prime tenancy because between Jan. 1, 2016, through Dec. 31, 2018, landlord permitted the apartment to be rented by a corporation and to various subtenants. Even if landlord collected no excess rent, it failed to properly manage its property and allowed the overcharges to take place. Landlord also benefitted from the arrangement by not having to confer rent stabilization rights on 13 individuals for a period of three years while violations of the rent stabilization law occurred. 

29 Allen St. LLC: DHCR Adm. Rev. Docket Nos. NM410008RO et seq. (6/3/25)[9-pg. document]