Among the many amendments made to New York’s rent stabilization laws by the Housing Stability and Tenant Protection Act of 2019 (HSTPA) were new provisions making attorney’s fees mandatory for tenants represented by counsel who make successful rent overcharge claims. At the same time, there is no provision in the amended laws for an owner to recover attorney’s fees in the event that it successfully defends against an overcharge claim. As amended, Rent Stabilization Law §26-516(a)(4) and ETPA §12(a)(1)(d) each now provide that:
“An owner found to have overcharged shall be assessed the reasonable costs and attorney’s fees of the proceeding and interest from the date of the overcharge at the rate of interest payable on a judgment pursuant to section five thousand four of the civil practice law and rules.”
Rent control laws contain similar provisions, although these tenants must seek attorney’s fees, along with any overcharge judgment, from a court if the DHCR rules that rent collected exceeds the maximum collectible rent (MCR) under rent control.
Two Decisions Shed Light
In two recent decisions, the DHCR awarded tenants attorney’s fees in connection with rent overcharge findings, spelled out the factors it considered in making an attorney’s fee award, and specified the hourly rates that it approved.
In Matter of Carr/Levy and Regina Metropolitan Co., LLC [DHCR Adm. Rev. Docket No. IU410002RP, LVT #31305 (2/2/21)], the case had been sent back to the DHCR for recalculation of an overcharge finding after consideration by New York’s highest court in Regina Metropolitan Co., LLC v. DHCR [2020 NY Slip Op 02127, LVT #30741 (2020)]. While revoking HSTPA’s retroactive application of a longer lookback period to overcharge cases pending on June 14, 2019, the Court of Appeals in Regina specified that the award of attorneys’ fees mandated by HSTPA was proper. On remand, the DHCR made a total overcharge finding of $20,487, and awarded the tenant $2,670 in attorney’s fees based on an hourly rate of $425. The DHCR granted attorneys’ fees for the period up to the issuance of the Rent Administrator’s initial determination, and the DHCR rejected the tenant’s claim for additional attorney’s fees for any appeal period.
In Matter of Lang/479 W. 146th Street LLC [DHCR Adm. Rev. Docket No. IS410091RK, LVT #31278 (2/2/21)], the DHCR found an overcharge of $12,515 and awarded tenant attorney’s fees totaling $8,691, again at a rate of $425 per hour. In this case, the DHCR outlined factors it may consider in making an award of attorney’s fees to a tenant. These include:
In the Langcase, the DHCR noted that the tenant’s attorney had been practicing landlord-tenant law since 1981 and had appeared before the agency in many other cases. As in the Carr proceeding, the DHCR limited attorney’s fees to time spent by the attorney on the proceeding before the Rent Administrator.
When Can Prevailing Owners Get Attorney’s Fees?
The HSTPA mandate for attorney’s fees applied by the DHCR for tenants in these cases also appears to apply to court proceedings involving rent overcharges. Relief for owners seeking attorney’s fees may still be available in court proceedings based on lease defaults by a tenant who raises an unsuccessful rent overcharge defense and counterclaim. Many standard lease forms contain a provision for a landlord’s recovery of attorney’s fees in cases based on lease violations. Real Property Law (RPL) §234 also has long provided for a reciprocal right to attorney’s fees for a tenant who successfully defends against the landlord’s claim in such proceedings. HSTPA amended RPL §234 to provide only a restriction that, “A landlord may not recover attorneys’ fees upon a default judgment.”
However, HSTPA added an additional provision concerning attorney’s fees in Real Property Actions and Proceedings Law (RPAPL) §702, which restricts the definition of “rent” that may be sought in a summary eviction proceeding to exclude various items of “additional rent,” including attorney’s fees. Some Housing Court judges have opined that RPAPL §702 prohibits an award of attorney’s fees to owners in eviction proceedings commenced after June 14, 2019. In one Housing Court case, the court noted that owners were “relegated to commencing a plenary action” for attorney’s fees and, based on RPAPL §702, severed the petitioner’s claim for attorney’s fees “without prejudice for a plenary action” [744 E. 215 LLC v. Simmonds, 2019 NY Slip Op 51996(U) (Civ.Ct. Bronx 2019)].
An appeals court ruling may be needed for further clarification on attorney’s fees questions raised by HSTPA.