Preferential Rent or Mere Calculation Error?

Q A tenant signed and returned a lease that is now in effect. After I mailed his copy of the lease back to him, I realized that a calculation error was made in the tenant's favor. Therefore, I sent him an adjusted lease with the correct figures before the lease was to take effect. The tenant refused to accept the adjusted lease. Is the lower, incorrectly calculated rent the base rent forever, or can it be considered a preferential rent for this lease term only?

A “For a rent to be considered a preferential rent, it must be labeled as such,” says Manhattan attorney Dov Treiman. Further, the label must indicate whether the preferential rent is to apply to the current lease term only or is to apply to renewals as well.

If there is no such language identifying the lower rent as a preferential rent, then it automatically becomes part of the base rent unfortunately, and there is nothing an owner can do about it. The owner cannot send a corrected lease.

If, after you sent the corrected lease, the tenant starts paying the corrected rent amount, you could have a problem. In this situation, the tenant can file an overcharge complaint against the owner at any time and seek treble damages—or three times the amount of the overcharge—because the apartment is rent stabilized. The owner will have no defense against the tenant's action.

If an owner in this situation ignores the original lease and subsequently takes rent increases—especially vacancy rent increases—on top of the corrected rent amount, Treiman warns that the treble damages can grow to be tens of thousands of dollars in an amazingly short period of time.