Fact
Sheet #16 - Collecting Overcharges in Rent Stabilized Apartments in New
York
The Rent Stabilization
Law provides two alternate methods for a tenant to collect rent overcharge
penalties from an owner. A tenant may begin to use either one of these
methods only after the New York State Division of Housing and Community
Renewal (DHCR) issues a final order establishing the legal regulated rent
and determining a penalty.
The penalty
for a rent overcharge is the amount an owner collected above the legal
regulated rent, plus accrued interest. For a complaint filed on or after
April 1, 1984, in the event of a willful overcharge, the penalty equals
three times the amount of the overcharge for two years prior to the filing
of the complaint. A final order is a Rent Administrator's order which is
not challenged administratively by the filing of a timely Petition for
Administrative Review (PAR) with DHCR, or, if challenged, the order issued
by the Commissioner determining the PAR.
The filing of
a PAR within 35 days of the Rent Administrator's order by the owner or
tenant will prevent the tenant from collecting the penalty awarded until
the Commissioner rules on the PAR. Following the issuance of the PAR order,
an aggrieved party may commence an Article 78 (Civil Practice Law and Rules)
court proceeding which will similarly delay the tenant's ability to file
the order as a judgment (see Method #2 below) until a final determination
is reached by the court.
The
timely filing of a PAR against the Rent Administrator's overcharge determination
does not affect that part of the order adjusting the tenant's legal regulated
rent. Therefore, unless the Commissioner specifically issues a "stay order" delaying
the adjustment to the rent, the tenant may begin to pay the lower rent
effective on the first rent payment date following the issuance of the
order even if the owner files a PAR.
After the 35
days for filing of the PAR have expired, and if neither the owner nor the
tenant has filed a PAR, the tenant can collect the rent overcharge penalty.
The tenant must choose only one of the two alternate methods described
below:
1. Offset
Method
The tenant may
deduct up to 20% of the penalty from the monthly rent until the penalty
is completely offset. If 20% of the penalty exceeds the tenant's monthly
rent, the tenant need not pay any rent until the full amount of the refund
due is recovered. Before exercising this option, the overcharged tenant
must wait 35 days from the issuance of the Rent Administrator's order.
As noted above, during this period, any party aggrieved by the order may
file a PAR (DHCR
Form RAR-2) challenging the correctness of the order.
If a PAR is filed, the overcharge penalty cannot be offset until the PAR
order affirms that an overcharge occurred and determines the final amount
of the penalty.
2. Judgment
Method
The filing of
a judgment may result in a lien being placed against the owner's real property.
If the owner does not satisfy the judgment, the lien may be enforced against
the owner's property by a county sheriff or the city sheriff.
To use this
option, the penalty must exceed $1,000, or if less, the tenant must have
moved from the apartment. Under this option, the tenant must also wait
35 days for the PAR filing period to expire.
After the 35
day PAR filing period expires without the filing of a PAR or 60 days after
the determination of the PAR affirming an overcharge award and if no court
challenge is commenced within those 60 days, the tenant will be required
to file with the County Clerk a Notice to Rent Stabilized Tenant Concerning
Payment of Penalties which Landlord Has Been Directed to Pay by an Administrator's
Order (DHCR
Form RN-14) and the Judgment Form (DHCR
Form RN-14.1).
Before the tenant may file these forms with the County Clerk, the tenant
must first send the Notice (Form RN-14) to DHCR's Overcharge Case Intake
Section at Gertz Plaza, 92-31 Union Hall Street, Jamaica, New York, 11433.
The tenant should not send to DHCR the Judgment Form (Form RN- 14.1). DHCR
will certify that the owner has not filed a PAR or a proceeding for judicial
review, or, if filed, that those proceedings have concluded. DHCR will
return to the tenant the completed Notice (Form RN-14) with a certified
copy of the Rent Administrator's order, and if applicable, a certified
copy of the PAR order. The tenant must then complete the affidavit contained
in the Notice (Form RN-14) stating that no portion of the overcharge penalty
has been OFFSET against the monthly rent (Method #1 above).
The tenant then
files the Notice, the Judgment Form and a certified copy of the overcharge
order with the County Clerk's office in the county in which the property
is located. The County Clerk's office will then docket the judgment.
While prior
owners who collected overcharges are jointly and severally liable for the
overcharges they collected, the refund of any overcharge, including penalties
collected on or after April 1, 1984 is the obligation of the current owner
except in certain limited cases, primarily involving judicial sales. In
those limited cases, prior owners are solely liable for overcharges actually
collected by them. For complaints filed and overcharges collected before
April 1, 1984, refunds and penalties are the obligation of the owner who
collected the overcharge.
For
more information or assistance, call the DHCR Rent InfoLine (718-739-6400)
or visit your Borough or County Rent Office.
DHCR
Version 4/7/05
RGB page updated 7/30/08
