Don't Delay Issuing Refunds if Rent Overcharges Are Found

If you discover that there are rent overcharges to your tenants, promptly refund the overages so that you can avoid having to pay DHCR-ordered triple damages. In recent decisions, the DHCR denied or revoked triple damages tenants sought for rent overcharges because owners gave tenants rent credits or refunds, plus interest, while the tenants’ complaints were pending.

In one case, a rent-stabilized tenant complained of rent overcharge. The district rent administrator (DRA) ruled for the tenant and ordered the landlord to refund $2,900, including triple damages. The owner appealed, claiming that there was no willful overcharge. The DHCR ruled for the owner and revoked the triple damages. The owner had given the tenant rent credits totaling $5,400 while the tenant’s complaint was pending. The refund credits more than covered the overcharge plus interest. The owner also reduced the tenant’s rent and corrected the tenant’s renewal lease more than seven months before the DRA ruled on the tenant’s complaint. Therefore, triple damages weren’t warranted [7 of 8 Realty Co., LLC, August 2014].

In another case, the tenant complained of rent overcharge. The DRA ruled for the tenant and ordered the landlord to refund over $32,000, including triple damages. The owner appealed, claiming that the overcharge wasn’t willful. The DHCR ruled for the owner and revoked the triple damages. The owner had issued three checks to the tenant to cover the overcharge refund, with interest, but the tenant refused to accept them.

The fact that the owner didn’t tender the refund within the initial time afforded to answer the complaint didn’t matter in this case. The owner made a good faith attempt to refund the full amount including interest before the DRA’s order was issued [Seashore Management, August 2014].