What's happening
This bill prohibits landlords from using post-complaint rent adjustments or refunds as evidence that rent overcharges were not willful.
Why it matters
Closes a landlord loophole. By preventing landlords from using post-complaint rent reductions or refunds as evidence that overcharges weren’t willful, the bill targets a common defense landlords use to escape harsher penalties for illegal rent increases.
Strengthens tenant protections. This change makes it easier for tenants to win triple damages (treble damages) for rent overcharges, deterring landlords from overcharging in the first place and supporting tenants’ ability to seek restitution.
Shifts burden of proof. Landlords can no longer “cure” willful overcharges after being caught; they must prove the overcharge was not willful based on their actions before the complaint, making enforcement of rent regulations more robust.
Impacts future and ongoing cases. This amendment will affect both new and ongoing overcharge disputes, potentially increasing the risk for landlords who have relied on post-complaint fixes in the past.
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Who cares
Headline styles
Tighten Rent Overcharge Rules
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to housing, construction and community development
- Referred to housing, construction and community development
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Tougher Penalties for Rent Overcharges
In Assembly Committee · Housing · Sponsor Harvey Epstein
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5862
2019-2020 Regular Sessions
IN SENATE
May 15, 2019
Introduced by Sen. JACKSON -- read twice and ordered printed, and when printed to be committed to the Committee on Housing, Construction and Community Development
AN ACT to amend the administrative code of the city of New York and the emergency tenant protection act of nineteen seventy-four, in relation to the determination of whether an overcharge of rent is willful
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The opening paragraph of subdivision a of section 26-516 of the administrative code of the city of New York, as amended by chapter 116 of the laws of 1997, is amended to read as follows:
Subject to the conditions and limitations of this subdivision, any owner of housing accommodations who, upon complaint of a tenant, or of the state division of housing and community renewal, is found by the state division of housing and community renewal, after a reasonable opportunity to be heard, to have collected an overcharge above the rent authorized for a housing accommodation subject to this chapter shall be liable to the tenant for a penalty equal to three times the amount of such overcharge. In no event shall such treble damage penalty be assessed against an owner based solely on said owner's failure to file a timely or proper initial or annual rent registration statement. If the owner establishes by a preponderance of the evidence that the overcharge was not willful, the state division of housing and community renewal shall establish the penalty as the amount of the overcharge plus interest. Neither the adjustment of the rent or a refund by an owner after the service of an overcharge complaint shall be a basis upon which the state division of housing and community renewal may determine that the overcharge was not willful. (i) Except as to complaints filed pursuant to clause (ii) of this paragraph, the legal regulated rent for purposes of determining an overcharge, shall be the rent indicated in the annual registration statement filed four years prior to the most recent regis-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11538-01-9
S. 5862 2
tration statement, (or, if more recently filed, the initial registration statement) plus in each case any subsequent lawful increases and adjustments. Where the amount of rent set forth in the annual rent registration statement filed four years prior to the most recent registration statement is not challenged within four years of its filing, neither such rent nor service of any registration shall be subject to challenge at any time thereafter. (ii) As to complaints filed within ninety days of the initial registration of a housing accommodation, the legal regulated rent shall be deemed to be the rent charged on the date four years prior to the date of the initial registration of the housing accommodation (or, if the housing accommodation was subject to this chapter for less than four years, the initial legal regulated rent) plus in each case, any lawful increases and adjustments. Where the rent charged on the date four years prior to the date of the initial registration of the accommodation cannot be established, such rent shall be established by the division.
§ 2. The opening paragraph of paragraph 1 of subdivision a of section 12 of section 4 of chapter 576 of the laws of 1974, constituting the emergency tenant protection act of nineteen seventy-four, as amended by chapter 116 of the laws of 1997, is amended to read as follows:
Subject to the conditions and limitations of this paragraph, any owner of housing accommodations in a city having a population of less than one million or a town or village as to which an emergency has been declared pursuant to section three, who, upon complaint of a tenant or of the state division of housing and community renewal, is found by the state division of housing and community renewal, after a reasonable opportunity to be heard, to have collected an overcharge above the rent authorized for a housing accommodation subject to this act shall be liable to the tenant for a penalty equal to three times the amount of such overcharge. In no event shall such treble damage penalty be assessed against an owner based solely on said owner's failure to file a proper or timely initial or annual rent registration statement. If the owner establishes by a preponderance of the evidence that the overcharge was neither willful nor attributable to his negligence, the state division of housing and community renewal shall establish the penalty as the amount of the overcharge plus interest at the rate of interest payable on a judgment pursuant to section five thousand four of the civil practice law and rules. Neither the adjustment of the rent or a refund by an owner after the service of an overcharge complaint shall be a basis upon which the state division of housing and community renewal may determine that the overcharge was not willful. (i) Except as to complaints filed pursuant to clause (ii) of this paragraph, the legal regulated rent for purposes of determining an overcharge, shall be deemed to be the rent indicated in the annual registration statement filed four years prior to the most recent registration statement, (or, if more recently filed, the initial registration statement) plus in each case any subsequent lawful increases and adjustments. Where the amount of rent set forth in the annual rent registration statement filed four years prior to the most recent registration statement is not challenged within four years of its filing, neither such rent nor service of any registration shall be subject to challenge at any time thereafter. (ii) As to complaints filed within ninety days of the initial registration of a housing accommodation, the legal regulated rent for purposes of determining an overcharge shall be deemed to be the rent charged on the date four years prior to the date of the initial registration of the housing accommodation (or, if the housing accommodation was subject to this act for
S. 5862 3
less than four years, the initial legal regulated rent) plus in each case, any lawful increases and adjustments. Where the rent charged on the date four years prior to the date of the initial registration of the accommodation cannot be established, such rent shall be established by the division. Where the amount of rent set forth in the annual rent registration statement filed four years prior to the most recent registration statement is not challenged within four years of its filing, neither such rent nor service of any registration shall be subject to challenge at any time thereafter.
§ 3. This act shall take effect immediately; provided that the amendments to section 26-516 of chapter 4 of title 26 of the administrative code of the city of New York made by section one of this act shall expire on the same date as such law expires and shall not affect the expiration of such law as provided under section 26-520 of such law; and provided that the amendments to section 12 of section 4 of the emergency tenant protection act of nineteen seventy-four made by section two of this act shall expire on the same date as such act expires and shall not affect the expiration of such act as provided in section 17 of chapter 576 of the laws of 1974.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the administrative code of the city of New York and the emergency tenant protection act of nineteen seventy- four, in relation to the determination of whether an overcharge of rent is willful
Purpose
Preserving key enforcement provisions of rent stabilization laws pertaining to willful rent overcharges
Summary of provisions
The bill would bar landlords, once a rent overcharge complaint is filed with HCR, from avoiding penalties for willfully overcharging tenants by simply refunding the overcharge.
Justification
As a means to achieve compliance, the rent stabilization laws impose penalties on owners who willfully overcharge tenants, in the form of treble damages, and further provide a statutory presumption of willful- ness unless an owner can demonstrate otherwise.
Unfortunately, the division of Housing and Community Renewal (HCR) has - for the past 30 years - had in place a stated policy that if a tenant files a rent overcharge complaint but the owner subsequently refunds the overcharge, no treble penalties will be imposed. This policy, which is not a formal regulation promulgated through the normal administrative procedures for inclusion in the rent stabilization code, but rather simply adopted by agency fiat as "Policy Statement 89-2," has functioned to completely undercut the prohibitions against rent overcharges.
The effect of Policy Statement 89-2 - essentially a "get out of jail free" card - is that it eliminates the disincentive to unscrupulous owners from overcharging tenants in violation of the law, since in the unlikely instance that they are caught they can avoid all penalties by just refunding the overcharge. This is analogous to a hypothetical crim- inal law provision that persons who are arrested for theft but who return the stolen property before trial will face no consequences; such a provision would only serve to encourage theft.
The proposed amendment would bar HCR from relying on the refund of the overcharge or adjustment of the rent as a basis, standing alone, for negating the existing statutory presumption of willfulness.
The proposed amendment would in no way diminish the existing provision that owners may overcome the presumption of willfulness in other ways, such as mistake or an oversight.
Legislative history
New bill.
State and local fiscal implications
None.
Effective date
This act shall take effect immediately; provided that the amendments to section 26-516 of chapter 4 of title 26 of the administrative code of the city of New York made by section one of this act shall expire on the same date as such law expires and shall not affect the expiration of such law as provided under section 26-520 of such law; and provided that the amendments to section 12 of section 4 of the emergency tenant protection act of nineteen seventy-four made by section two of this act shall expire on the same date as such act expires and shall not affect the expiration of such act as provided in section 17 of chapter 576 of the laws of 1974.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.