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Where a tenant should file a rent overcharge complaint in New York City -- never at DHCR!

Posted by nyhawk on April 10, 2000 at 06:27:02:

The law allows tenants three options for raising the claim that the rent they have been paying is more than the law allows under the rent regulated systems in New York City. The three options are: (1) starting a lawsuit, either in Supreme Court, or Civil Court if the amount in controversy is under $25,000.00; or (2) stop paying rent thereby forcing the landlord to start a non-payment proceeding in Housing Court, then counterclaiming (suing the other party who sued you in the same lawsuit) claiming a rent overcharge; or (3) filing a rent overcharge complaint with DHCR.

Starting a lawsuit, in Supreme or Civil Court, is clearly a much better place to raise a rent overcharge claim for several reasons: Supreme or Civil Court usually has "better" judges than in Housing Court (better meaning more experienced); the rules of procedure in Supreme and Civil Court are much better from a tenant's perspective than in Housing Court (most significantly, for example, discovery is available in Supreme and Civil Court, but only available with permission in Housing Court, and hard to get in rent overcharge situations); if a tenant is counterclaiming in Housing Court it is a defensive posture, rather than an offensive posture, if suing in Supreme or Civil Court.

The option of filing a rent overcharge complaint with DHCR is the worst option of all three, but perhaps because of their unawareness of the pitfalls of filing a rent overcharge complaint with DHCR, inexplicably, it is the option tenants seem to select the most. A rent overcharge complaint should never be filed with DHCR because it takes a very long time to have DHCR decide a rent overcharge complaint (literally years), and in the event the tenant wins, the landlord can file an administrative appeal with DHCR (called a PAR) for free, because the landlord does not have to put up the overcharge award amount. Also, the PAR appeal will likely take a few more years. In contrast, in a Supreme or Civil Court case, the case will be resolved in weeks or months and if the landlord loses and wants to appeal, it would have to put up the judgment amount or a bond -- the equivalent of the full money amount awarded to the tenant. Having to put up the full judgment amount as a condition of appealing is certainly a disincentive for a landlord to appeal.

Filing a complaint with DHCR seems like a good option because it can be done for free, that is, without the assistance of a lawyer. This option, however, is actually penny wise and pound foolish, because almost every landlord uses sophisticated lawyers to respond to rent overcharge complaints and DHCR does not give unrepresented tenants any slack.

Furthermore, tenants should be aware that many tenants who at first win rent overcharge complaints at DHCR, invariably find out that they ultimately lose after the landlord files the administrative appeal with DHCR (the PAR). This common result occurs because DHCR, which is a very pro-landlord government agency, strategically put its army of pro-landlord people in the PAR units, so that they can overrule the rent overcharge complaints that are favorable to tenants. After a tenant loses at the PAR level, the next step in the appeal procedure, is that the tenant can then bring an Article 78 proceeding in Supreme Court (which is different than the rent overcharge lawsuit that can be started by a tenant in Supreme Court -- discussed above as one of the three options) and then possibly seeking the help of a lawyer for the first time. By then it is probably too late to salvage the case, because the Supreme Court judge can only review the evidence and arguments put before DHCR by the parties (all the evidence and arguments put before DHCR is called the record). Having not had the help of a lawyer while the rent overcharge complaint was pending before DHCR, it is likely that the record will have been inadequately developed -- from the tenant's perspective. Thus, more time and money might be spent fighting a case that well might have had merit, but that the landlords sophisticated lawyers and DHCR cleverly turned into a loser.

So, filing a complaint with DHCR is a cheap way to go, but it will take far longer than the other two options (and you must pay your rent while DHCR ponders your complaint for years), it will likely put the tenant up against sophisticated lawyers who know how to deal with DHCR very well, and in the long run, will likely result in a losing decision for the tenant.

In conclusion, it is suggested that any tenant considering raising a rent overcharge complaint avoid the option of filing such complaint with DHCR at all costs; instead, consult a pro-tenant attorney, who will determine the potential merits of your case and if it is determined that your case has merit, explain the options of either starting a lawsuit in Supreme or Civil Court, or withholding rent, so the rent overcharge issue can be raised in a non-payment proceeding in Housing Court, as a counterclaim.

DISCLAIMER: This information is offered only for general information purposes. It is not offered and does not constitute legal advice or legal opinions. You should not act or rely upon this information without seeking the advice of an attorney.

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