Does a 3 month discount spread over the lease = Preferential

[Jeffff]

Hello new member posting after researching my defense for housing court.

Moved into a stabilized multi apartment building in BK Jan 1 2021 with a legal rent of $2537. Was offered 3 months free, spread across the duration of the 1 year lease making monthly due $1902.75. This was in a rider, listed as "one time discount".

Landlord has made many errors in this situation and I feel pretty ok going into this.

1 - LL did not offer a new lease until over 90 days AFTER the lease had ended
2 - LL failed to preserve the discount as a preferential rate (this is grey to me still)
3 - LL payment portal requested $1902.75 on Jan 1 2022 - the first month of the new term. I paid this amount and it has been accepted as the amount due by the LL. I continued to pay this preferential rate monthly.
4 - LL showed up at my apt in March 2022 demanding i signed the lease. I refused due to the amount, and was told I would have to pay back the amount owed to them.
5 - LL gave up on 2022 lease, arguing I owed the full amount monthly and sending harassing 'outstanding balance' emails monthly

There is more but the real issue that I believe is important for this forum, is point 2. Are there any decisions reflecting that a discounted rate, given across the duration of a lease, is considered to be a Preferential rate?

I emailed the TPU, they called it "an illegal ontime discount" but there was no wording about on time in my lease. The TPU said to the effect, the discount was NOT properly preserved in the new lease, and paid rent becomes legal rent.

Any help would be great, but I do need to submit my defense to the court this week.

thanks

[TenantNet]

First, there are no such things as "stabilized buildings." There are buildings that can contain RS units, and they might also contain RC and unregulated units. It's an important distinction and people get it wrong a lot.

Consider, $2,537 lease rent x 12 months = $30,444 for the year. Take away 3 months (3 x 2537 = $7,611) and you have $22,833 or $1,902.75 per month payable rent. Or just multiply $2,537 x 3/4 and you get the same result. So from what you say above, that's what you pay per month for the first year ONLY.

Now, that's a one-time discount and NOT a preferential rent. See this case:
https://iapps.courts.state.ny.us/fbem/D ... ystem=prod

...plaintiff contends that the one-month rent concession was effectively preferential rent ... in Burrow ... held that a two-month rent concession is legally insufficient to make out a rental overcharge claim (citing DHCR Fact Sheet 40).

We don't know if that case has been appealed.

Also see viewtopic.php?f=3&t=14788

The law on preferential rents changed in 2019, but it still doesn't make a discount into a preferential rent. If the LL wanted to give you a pref. rent at the outset, it would be reflected as so in the initial lease (you didn't give us a copy of that - and please don't - but we're going on your description above).

You say you thought it was a pref rent "across the duration of the lease." Not so. You also say it's limited to 3 month across the first year. It can't be both. A true pref rent would be for the duration of your tenancy with the unit only going back to the "legal rent" when you vacate.

As to the lateness in offering a renewal, first make sure the renewal offer is on DHCR form RTP-8 and read the rules on the back of the form. See the latest version of the RTP-8 at https://hcr.ny.gov/system/files/documen ... llable.pdf

Sounds like you paid what the portal requested. On that we recommend tenants NOT use online payment portals and instead pay by check or money order (sent by cert. mail or by certificate of mailing). There are problems with LL portals. And no matter how you pay, make sure there is a memo line and you specify which month the rent applies, i.e., "Rent for October 2023 and for no other month." LLs play games with how they apply rent, so this is critical. Some electronic payment systems (i.e., ACH) might not have a memo field and this is a serious problem.

Now, if they made a mistake on the amount owed, you have to see if they discovered and corrected the mistake in a reasonable time. What is "reasonable" is a term of art, but I would think 6 mo. is reasonable by 6 years is not (also the statute of limitations is 6 years).

But do not confuse renewal leases and legal rents with what you paid. Keep the issues separate.

If a LL physically shows up at your door (unless they live in the building), tell them to go away and send you a letter. Recod the LL on a smartphone (it's legal). Tell them to put it in writing, whatever it is. In our view, knocking on your door (in some cases) can be harassment.

Why TPU would call it an illegal one-time discount. Did they say why they thought it was illegal? Such discounts do happen regularly. For some reason you - and TPU - think the lease says it's preferential. That's not what you describe. Someone is confused.

[Jeffff]

Thank you for the reply.

The lease is a stabilized apartment in a 421-a building

You are correct with the math, the lease does not list this as preferential rent, but this is the crux of my question.

The courts have repeatedly ruled that a single or specific month discount does not qualify as preferential, whereas prorated amount discounts were actually preferential rents


https://iapps.courts.state.ny.us/nyscef ... NLknWA4Q==

Defendant and amici curiae contended that the Division of
Housing and Community Renewal (DHCR) had addressed this very issue in fact sheet
40, which provided that one-time rent concessions that apply to a specific month, ... , do not affect the legal regulated rent, whereas prorated discounts
were actually preferential rents, which must be the rent registered under section
2521.1(g). Defendant acknowledges that fact sheet 40 has been revised and no longer
discusses rent concessions, but argues that it remains a valid interpretation of the law.

and

https://iapps.courts.state.ny.us/nyscef ... ZokC7ktQ==

Defendant and amici curiae urge that DHCR has addressed this very issue in its
fact sheet 40, which provided that a one-time rent concession that applies to a specific
month, such as plaintiff’s, does not affect the legal regulated rent, whereas prorated
discounts are actually preferential rents, which must be the rent registered under RSC
2521.1(g).

and digging deeper into Burrows v 75-25 here

https://iapps.courts.state.ny.us/nyscef ... NgDTyHRQ==

n pertinent part, fact sheet 40, under the heading “Concessions,” stated (at 3):
“There are two types of rent concessions. One is concession for specific months, as for example,
where the lease provides that the tenant will not have to pay rent for one or more specified
months during the lease term. This type of concession is not considered a preferential rent.
“The other type is a prorated concession, where the dollar value of the rent free month(s) is
prorated over the entire term of the lease and not tied to a specific month or months. A prorated concession is really the same as a preferential rent and will be treated in the same manner.”

The rider on my original lease states

2. As agreed, the tenant will receive a one-time promotional credit of three
months free which will result in a monthly credit of $634.75 from January1st,
2021 through December 31st 2021.

The payment ledger on the LL portal shows a concession discount every single month for the first year AND the same concession given in Jan 2022 - which is the 13th month, at which time a lease had not been offered, and was not covered under the terms of the rider.

02/01/2021 -634.25 -634.25
Description Less- Concessions - February 2021 - Concession
Paid By
02/01/2021 2,537.00 1,902.75
Description Rent - February 2021 - Monthly Rent
Paid By
02/02/2021 1,902.75 0.00
Description Payment (Reference #quick pay) quick pay
Paid By My Name

---


01/01/2022 -634.25 -634.25
Description Less- Concessions - January 2022 - Concession
Paid By
01/01/2022 2,537.00 1,902.75
Description Rent - January 2022 - Monthly Rent
Paid By
01/01/2022 1,902.75 0.00
Description Payment (Reference #quick pay) quick pay
Paid By My Name

so thank you for the information!

[TenantNet]

I'll have to dig into this, but it might take some time.

[Jeffff]

Thank you, I'm at the court office on Livingston St now replying to the non payment case. I am claiming rent requested is not the legal rent and harassment.

I reportedly will get a court date in 3 to 8 days but I'll follow up with that.
You've already provided a lot with the link and where it led me.
If you find more that's great, otherwise I'll proceed on my own.

[Jeffff]

I Also followed up with TPU and their answer is

"If the credits are spread across the lease term in monthly installments that is exactly what prorated means. What you are describing is not a ONE-time discount, it is a monthly discount that occurred 12 separate times over the course of your 12-month lease term"

[TenantNet]

It's just that a) have been under the weather and b) there are about ten other posters waiting for replies. I haven't looked at all the stuff you posted, but will try to get to it; just can't promise when.

Also understand that decisions in BK (2nd Dept) are not always the same as the 1st Dept (Manhattan).

When you put in an Answer, make sure the clerks write down what you tell them (they are notorious for not doing so). You might have to amend the Answer later. In all honesty, harassment will go nowhere unless you have photos of the LL swinging a bat at you. You are not limited to just the one defense. Look carefully at the affidavit of service (in the court file you will have to ask for - they don't send it to you), or on NYSCEF. https://iapps.courts.state.ny.us/nyscef/HomePage

Search as a guest and plug in your docket number. See if the affidavit of service is correct and complies with service requirements. Did they serve you with the 14-day demand? If not, that's a jurisdictional problem.

Make sure you put in Rent Tendered and Refused as a defense.

Chances are on the first court date they will send you to a room for "advice." Advice is nice, but tenants need lawyers. Still, then they will give you a date/time for a second appearance.

[TenantNet]

DHCR often gets things wrong. Not suggesting they are incorrect here, but it happens a lot. You need to pin down a fact pattern: at what point, how many months, etc. is something considered a pref. rent and not a discount.

I would consider asking DHCR for an Opinion Letter (they do that a lot). In a letter to them put down the facts, reduced rent every month for the term of the lease and ask for their opinion. They can't and won't comment on your case (but tell them you need a reply ASAP). Of course you always take the chance they might opine not the way you want it. It might be important how it was presented on the initial lease.

[Jeffff]

Thank you. I answered applicable items as mentioned. The Court docs online had said 3 to 8 days. They gave me a trial date in Feb 2024.

Guess we have time to dig further.

[TenantNet]

Trial dates depend on the judge and part, and are different for each judge. First, you will have one or more appearances in the Resolution Part (not the same room or judge as a trial judge). Each court room will have a large calendar with dates crossed off if not available. Many ask for "first available." In one recent case after the first appearance, the second was 2-1/2 months later, and for the third, it was another 2 months.

You will have to put in an answer during that time. But use the time wisely to get an attorney if you can and put together any motions that might be appropriate, i.e., Motion to Dismiss, Motion for Summary Judgment, etc. Those can put appearances even further down the line.

In my view, it's best to make a case go away while still in the Resolution Part. I do not think actually going to trial is good for tenants for a number of reasons. This is not Judge Judy ... the wheels turn slowly and there are things you can do during this time.

When you say they gave you a trial date, I suspect that's a date for the next appearance, not an actual trial. You can also go to Ecourts and plug in your docket number .. although it make take a few days to appear on that system. https://iapps.courts.state.ny.us/webcivil/ecourtsMain