Tenant Was Overcharged After Sub Rehab Exemption Application Was Denied

Tenant complained to the DHCR of rent overcharge. Landlord claimed that the building was exempt from rent stabilization based on substantial rehabilitation and that therefore there could be no overcharge. After landlord's separate sub rehab exemption application was denied without further appeal, the DRA ruled for tenant and directed landlord to refund a total of $87,000, including triple damages.

Landlord appealed and lost. Landlord argued that: (a) it hadn't completed its appeal of the DHCR's sub rehab decision; and (b) there was no willful rent overcharge. Landlord had filed an Article 78 court appeal after the DHCR denied its PAR of the sub rehab exemption ruling. Landlord later filed a notice of appeal to the Appellate Division but never timely perfected that appeal. So the appeal was closed as of July 2023, and the DRA waited another 11 months before properly issuing the rent overcharge determination.

As to triple damages, the overcharge finding wasn't based solely on landlord's failure to register tenant's rent but also on having charged tenant in excess of the legal regulated rent between 2017 and 2023, and because landlord hadn't rebutted the statutory presumption of willfulness. Landlord also claimed that the DRA didn't consider individual apartment improvements (IAIs) in calculating the legal rent, but landlord submitted no documentation to support its IAI claim. 

Pena: DHCR Adm Rev. Docket No. MS210011RO (3/19/25)[5-pg. document]