Rent Overcharge Complaints
Under the current Rent Stabilization Law, a tenant who was overcharged in rent in rent-stabilized or rent-controlled buildings can claim the amount collected above the legal regulated rent combined with accrued interest. An overcharge complaint may be brought at the Supreme or Civil Court, the Housing Court, or the Department of Housing and Community Renewal (DHCR). The tenant is entitled to treble damages, that is, three times the amount of the overcharged rent if the Court finds that the landlord willfully overcharged the rent.
The tenant whose rent was overcharged may opt to bring his or her action at the Supreme or Civil Court. The case will be brought to the Supreme Court only if the contested rent amount exceeds $25,000.00. The Supreme/Civil Court could be the most favorable venue for the tenant to present his/her case because it is mandatory for the parties to make full disclosure of the relevant documents during the discovery phase. The tenant can plead rent overcharge in the Housing Court by filing a counterclaim concerning the overcharge in an eviction proceeding.
In DHCR proceedings, the judgment for penalties is initially made by a Rent Administrator. The Rent Administrator’s order is final if it is not challenged by the timely filing of Petition for Administrative Review (PAR) with the DHCR. This means that if a PAR is not filed within 35 days after the Rent Administrator’s order, the tenant can proceed with collecting the penalties.
The timely filing of PAR prevents the tenant from the collecting the penalty awarded until the DHCR Commissioner rules on the PAR. After the PAR judgment, an aggrieved party may appeal the result per NY CPLR Article 78. If the landlord chooses to exercise this right after a judgment against him/her in a PAR proceeding, the tenant may not collect the penalties until the final judgment is reached.
A timely filing of PAR does not affect the Rent Administrator’s order to adjust the rent per the rent stabilization or rent control. This means that once the Rent Administrator issued a decision, the tenant can start paying the lower rent even if the landlord files a PAR unless the DHCR Commissioner specifically issues a “stay order” delaying the adjustment of rent.
There are two methods for a tenant to collect rent overcharge penalties from the landlord – the Offset Method and the Judgment Method. In Offset Method, the tenant may deduct up to 20% of the penalty from the monthly rent until the penalty is completely offset. The Judgment Method enables the tenant to recover the penalty amount at once; if not, the lien may be enforced against the owner’s property by a county or city sheriff.