Foreclosure Prevention

Overcharge

Overcharge
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OVERVIEW

For rent stabilized apartments, owners may be ordered to refund excess rent based on a finding of rent overcharge. A finding by DHCR of a willful rent overcharge by the owner may result in the assessment of treble damages.

Collecting Overcharge

  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. 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.

Also see Fact Sheet #16: Collecting Overcharges in Rent Stabilized Apartments in New York City

Fact Sheet #16 Translations:

Frequently Asked Questions

1) What are the legally permissible methods for increasing the rent of a rent regulated apartment?

There are several ways to increase the rent for apartments under both Rent Control and Rent Stabilization. For specific information, see Fact Sheets:

#5 - Vacancy Leases in Rent Stabilized Apartments
#22 - Maximum Base Rent Program (MBR) Questions and Answers for Owners
#24 – Major Capital Improvements (MCI)
#26 - Guide to Rent Increases for Rent Stabilized Apartments
#40 – Preferential Rents
Operational Bulletin 2016-1 – Individual Apartment Improvements

 

2) Is a building owner required to provide a tenant with an itemized bill?

Owners are required to provide an itemized bill or rent receipt at the time of each rental payment to rent controlled tenants. Owners are not required to provide rent stabilized tenants with an itemized bill or rent receipt.

 

3) May an owner collect a lease or maximum collectible rent increase from a tenant when a DHCR rent reduction order for decrease in services is still in effect?

If the rent reduction order was issued to a rent stabilized tenant, the owner cannot collect a guideline rent increase upon renewal or vacancy but can calculate the increase in the new lease. The rent that is collected will remain frozen until DHCR issues a rent restoration order.

If the rent reduction order was issued to a rent controlled tenant, only rent reductions for essential services bar the maximum collectible rent from being increased until DHCR issues a rent restoration order. If the rent-controlled tenant vacates the apartment, a fair market rent set for the incoming rent stabilized tenant can be charged, but no other rent increases can be collected until DHCR issues a rent restoration order. For more information, see Policy Statement 90-1.

 

4) Are tenants required to pay NYC Sales Tax to the owner on a garage/parking space that is subject to Rent Stabilization?

The NYC Sales Tax can be collected if the tax was imposed on the owner for the garage/parking space, and the garage/parking space was provided to the tenant in a charge separate from the apartment rent. It can never be calculated in the apartment rent. 

 

5) Can a tenant in a rent regulated apartment take in a roommate and is there a limit on the rent that the roommate can be charged?

When only one tenant is named on a lease, the tenant has the right to take in a roommate and the roommate's dependent children. When two or more tenants are named on the lease, the number of tenants and roommates cannot exceed the number of tenants named in the lease. In all situations, occupancy may be restricted in order to comply with municipal regulations concerning overcrowding.

In a rent stabilized apartment, the rent collected from the roommate cannot exceed their proportionate share of the apartment. For example, one tenant named on a lease can take in one roommate and the roommate can be charged no more than half of the rent charged to the prime tenant. The roommate can be advised to file a complaint of rent overcharge with DHCR if they were charged in excess of that proportionate share.

In a rent controlled apartment, a roommate may not be charged an amount of rent that is in excess of the legal rent for the apartment. Any determination of a rent overcharge is under the jurisdiction of the civil court.

 

Fact Sheets

  •  

    Fact Sheet #40: Preferential Rents

    A preferential rent is a rent which an owner agrees to charge that is lower than the legal regulated rent that the owner could lawfully collect. This document explains preferential rent in more detail.

     

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Policy Statement

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