TPU Properly Referred Rent Overcharge Claim to DRA

The DHCR's Tenant Protection Unit (TPU) commenced an individual apartment improvement (IAI) audit for tenant's apartment and, in June 2013, issued a notice stating that landlord's claimed IAIs didn't support the legal regulated rent registered in 2011. The TPU found that the rent should be registered as $1,442. Landlord didn't respond to the notice, and TPU referred the case to the DRA to process a rent overcharge claim. The DRA notified landlord that a 1994 DHCR rent reduction order froze tenant's rent at $496 and that an overcharge occurred after May 20, 2010. The DRA also said that landlord had proved only $10,000 of claimed IAI costs of $24,500. The DRA then ruled for tenant, finding a rent overcharge.

Landlord appealed and lost. The DHCR rejected landlord's claim that the DRA had no authority to commence an overcharge proceeding without a tenant complaint. But Rent Stabilization Code Section 2527.2 permits the DHCR to institute a proceeding on its own initiative when deemed necessary. And in the case of Portofino v. DHCR, a court approved TPU's authority to refer a complaint to the DRA. Landlord also claimed that the conditions in the rent reduction order had long been corrected. But without filing an application for rent restoration and obtaining a rent restoration order from the DHCR, the rent reduction order remained in effect. Triple damages also applied under DHCR Policy Statement 89-2 because landlord refunded only $8,500 of a much greater overcharge and only long after the overcharge proceeding commenced. 

2758-2760 LLC: DHCR Adm. Rev. Docket No. EX610064RO (3/9/18) [4-pg. doc.]