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NY Times Article

Postby HAJ77 » Mon Jan 13, 2003 2:16 pm

An article ( When Rents Exceed Legal Limits from the Sunday, January 12th edition of the NY Times Real Estate Section.

When Rents Exceed Legal Limits

IN the various interactions between tenants and landlords, few are as vexing as disputes over overcharges in rent-regulated apartments.

The stakes, lawyers for both groups say, can be high. Landlords who overcharge tenants can be required to refund up to four years worth of overcharges — often with a refund for the last two years of triple the amount of the actual overcharge. But tenants who do not file a complaint within two years of the first overcharge for apartments under rent control and four years for those under rent stabilization could lose the right to obtain any refund at all.

"This is a complaint-driven process," said Marcia Hirsch, general counsel for the state Division of Housing and Community Renewal, which handles rent overcharge complaints. "A tenant can file a complaint that basically says, `I think I'm being overcharged,' and we will open a file." In fact, since July 1997, the division has accepted more than 8,500 overcharge complaints, Ms. Hirsch said. Because many cases are appealed, the agency does not maintain statistics on the outcomes of the cases, she added.

Actually completing the complaint, however, is a bit more complicated. The complaint form (available from housing division offices and on the agency's Web site at www.dhcr.state.ny.us under "rent administration: forms") is a four-page document with 25 questions. And while the form poses some fairly predictable questions about the tenant, the building and the lease, it also requires the tenant to articulate why he believes he is being overcharged and to submit evidence. In addition, the tenant must record his rental payments month by month from the date of occupancy or for the past four years if rent-stabilized or two years if rent-controlled, whichever is shorter. The form also elicits whatever information the tenant may have about rent increases charged by the landlord.

"There are four common ways that landlords may increase rents," Ms. Hirsch said. The most common is the result of increases approved by the New York City Rent Guidelines Board (for rent-stabilized tenants) or by the Division of Housing and Community Renewal (for rent-controlled tenants.) For example, Ms. Hirsch said, for rent-stabilized renewal leases signed from Oct. 1, 1997, to Sept. 30, 2000, the board allowed increases of 2 percent for one-year leases and 4 percent for two-year leases. For leases signed from Oct. 1, 2000, and Sept. 30, 2002, increases of 4 percent and 6 percent were allowed.

Besides those increases, Ms. Hirsch said, landlords have also been able — since June 15, 1997 — to raise the legal rent for a vacant apartment by adding a "vacancy allowance." For new leases since that date, she said, landlords have been entitled to an 18 percent increase for a one-year lease and a 20 percent increase for a two-year lease. Under some circumstances, Ms. Hirsch said, additional vacancy increases may be allowed. For example, if the prior legal rent for an apartment was less than $300 a month, the landlord is entitled to an additional vacancy allowance of $100 a month.

Landlords may also legally increase rents, Ms. Hirsch said, are by passing along the costs of major capital improvements made throughout the building or to individual apartments. With a buildingwide improvement, she said, the landlord is typically entitled to a permanent per-room increase of one eighty-fourth of the cost of the improvement, with each tenant's increase being allocated based on how many rooms he has. With an individual apartment improvement, the landlord is entitled to permanently increase a unit's rent by one-fortieth of the cost of an improvement without going through the housing division. (When an individual apartment improvement is made to an occupied apartment, Ms. Hirsch said, the tenant must consent to the improvement in writing for the landlord to be entitled to an increase.)

Knowing the amount of allowable increases over a period of years, of course, is of little use unless the tenant has a starting point upon which to base his or her calculations. And that, lawyers say, is where the going gets a little rough.

David Ng, a Manhattan lawyer who frequently represents tenants, said that one way for a tenant to identify a reference point of the last legal rent is to ask the housing division for a list of recent rent registrations for that apartment filed by the landlord. Some landlords routinely provide this information directly to tenants. Having that list, Mr. Ng said, will provide the tenant with a point of reference from which he or she can determine the legal rent.

But there is no guarantee that the landlord has registered the rent. Mr. Ng explained that while the law requires landlords to file registered rents annually, there is basically no penalty for failing to do so. As a result, it is conceivable that a tenant who rented an apartment in, say, January of 2000 could find that the landlord has not registered any rent for the apartment since January 1998. That could be a problem, Mr. Ng said, because of a change in the law that took effect on June 15, 1997.

That change, he said, established a "statute of limitations" for rent overcharge actions. A statute of limitations, Mr. Ng said, is a time frame within which a lawsuit — or administrative complaint — must be brought in order for the plaintiff to recover damages. For rent-stabilized tenants, he said, a complaint for a rent overcharge must be filed within four years of the date of the first alleged overcharge. For rent-controlled tenants, the time frame is two years.

Under the 1997 change in the law, Mr. Ng said, the Division of Housing and Community Renewal will go back only four years to establish a starting point for determining the current allowable rent for a rent-stabilized apartment. So, for example, if a tenant rented an apartment on Feb. 1, 2000, and then filed an overcharge complaint on Jan. 31, 2003, the division will go back to the beginning of the tenancy to calculate the overcharge up to the present time. On the other hand, if a tenant rented an apartment for more than the legal rent on Feb. 1, 1999, but the tenant did not discover the overcharge or file a complaint until Feb. 2, 2003, and all increases since then have been legal, the tenant probably will not be able to recover anything.

A tenant who is being overcharged and who does file within the period prescribed by the law, however, may be entitled to recover even more than the actual overcharge.

Sherwin Belkin, a Manhattan lawyer who represents landlords, said that when housing division determines there has been a "willful" overcharge, the agency has the power to order the landlord to reimburse the tenant for the amount of the overcharge — for up to four years of overcharges in the case of a rent stabilized tenant and two years for a rent-controlled tenant — and can order that the amount of the reimbursement for the last two years be tripled. The tenant then has the right to deduct up to 20 percent per month from the rent until the overcharge and any penalty are fully recovered. When the amount exceeds $1,000 or the tenant has moved from the apartment, he or she may opt to obtain a judgment from the landlord for the full amount.

Mr. Belkin said that while the two- or four-year limitation on overcharge complaints may seem harsh to tenants, the use of a statute of limitations is basically fair. "Under D.H.C.R.'s interpretation of the law, "the onus is completely on the landlord to prove the legality of the rent," he said. "And if the agency that there has been an overcharge, there is an automatic presumption that the overcharge was willful, so the landlord then has the additional burden of proving that it was not. It's a double whammy."

John Fisher, director of TenantNet, an Internet-based information service at www.tenant.net, said tenants who believe they are being overcharged should file a complaint with the housing division as soon as those suspicions are confirmed. "You need to get as much information as you can, as quickly as you can."

In addition, Mr. Fisher said, tenants should talk to other rent-regulated residents in the building to get some idea of other tenants' rents.

"Don't be embarrassed," he said. "Even a small overcharge can add up to a lot of money."

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Re: NY Times Article

Postby mjr203 » Mon Jan 13, 2003 2:59 pm

they seem to have omitted the part about how the DHCR takes 2 years to process a single simple case while the tenant is left holding their ...

most Landlords suck it.
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