Author: Ronald S. Languedoc
The Housing Stability and Tenant Protection Act (“HSTPA”), enacted in June 2019, dramatically amended the Rent Stabilization Law provisions as to how legal regulated rents and overcharge damages should be calculated, and these changes strongly benefit tenants. However, in a major turnaround, on April 2, 2020, the state’s highest court ruled in the case of Regina Metropolitan LLC v. DHCR, also known as “Regina,” that it would be a denial of a landlord’s constitutional due process rights to apply many of the most significant changes in the law retroactively, that is to overcharges that occurred prior to June 2019.
Attorneys at HMGJ are keeping on top of all these changes in the law, as well as the continuing stream of recent court decisions, many of which have been handled by HMGJ. Here are some things tenants with possible rent overcharge claims need to know right now:
- The four-year lookback rule was repealed by the HSTPA, but it still applies to overcharges collected prior to June 2019. Under the four-year lookback rule, it is usually not possible to examine the rental history of a particular apartment more than four years prior to the date a formal claim is filed for the purpose of determining whether there was an overcharge. Under the HSTPA, as restricted by the court in Regina, it is now possible to review an apartment’s rental history back as far as June 2015, or four years prior to the enactment of the new law.
- The fraud exception to the four-year lookback rule is still the main process available to challenge the rent history prior to June 2015. However, the tenant has the burden of proving that the landlord engaged in fraud, which means more than a suspicious bump in the rent. HMGJ attorneys are currently handling a number of cases where we have raised fraud as an issue.
- Claims of wrongful deregulation, also known as “status claims” are still not subject to any statute of limitations. The tenant can challenge the status of an apartment at any time, but will not necessarily recover any overcharges, especially if the improper deregulation occurred many years ago.
- The “treble damages escape valve rule” under the old law still apples to overcharges collected prior to June 2019. Under this rule, a landlord who receives formal notice of an overcharge claim from a tenant can avoid having to pay treble damages by immediately refunding the total amount of the overcharge with interest. This escape valve provision no longer exists and will not apply to overcharges collected after June 2019.
- The recovery period is increased from four years to six years, but not retroactively. Tenants will be able to recover for overcharges that occurred on or after June 2015, or six years prior to the date the claim is filed, whichever is later.
- Similarly, the recovery period for treble damages is increased from two years to six years, but not retroactively. Tenants may recover treble damages for overcharges dating from June 2017 or six years prior to the date the claim is filed, whichever is later.
- Tenants’ right to recover their attorneys’ fees and costs under the HSTPA: We are cautiously optimistic that tenants will be awarded their attorneys’ fees and costs, even if they filed overcharge their claim prior to June 2019, or if the claim involves overcharges prior to June 2019.