Overcharge Liability is the calculation of the potential amount of rent refunds a Landlord may be liable for, in the worst case scenario, if all of the tenants who may or may not have been overcharged file Overcharge Complaints and are awarded treble (triple) damages. For a Landlord selling a property, any overcharge liability usually means a reduction in the purchase price. For a Landlord refinancing a property, it usually means a lower mortgage amount that the lender is willing to give.
For a Purchaser, Overcharge Liability can mean that he/she will pay less for the building, but it also means that he/she is buying the seller's problems. As stated, Overcharge Liability means the worst case scenario. It does not mean that every tenant, or for that matter any tenant, will file an Overcharge Complaint. What it means is - Let the Buyer Beware.
Overcharge Liability occurs in cases where a Landlord miscalculates a rent, due to using the wrong Rent Guidelines Board Increase amount, rounding off an increase to the nearest dollar (or ten), miscalculation of Vacancy Rent amounts, and yes, the ever popular - GREED! Many Landlords think that they can get away with raising a tenant's rent as much as they want. And many Landlords do get away with it. Until the tenant files an Overcharge Complaint. If DHCR decides that a Landlord has willfully overcharged a tenant, they may (and usually do) award treble damages.
A $10 a month overcharge over a five year period, with Guidelines increases and treble damages factored in, amounts to over $2,000. Most willful overcharges are far more than that and treble damage awards to tenants frequently exceed $25,000.
DHCRexpert.com reviews Rent Registration Printouts, leases, rent histories, vacancies, major capital improvements and other factors, then calculates the maximum legal rent using the Rent Guidelines Board Increase Orders. We prepare a Rent Calculation form for each apartment in the building and then assess the amount of Overcharge Liability for the entire building. An important factor in this calculation is the accuracy of the Landlord's record keeping and the defensibility of a potential Overcharge Complaint.
We then provide an Opinion Letter for the seller, purchaser or lender, setting forth the estimated Overcharge Liability, based on the above factors.
Click Here for Opinion Letters.