Don’t Require Rent to Be Paid Months in Advance

Make sure nothing in your lease requires rent-stabilized tenants to pay their rent in advance. For example, if you require prospective tenants to pay a year's rent in advance, the Division of Housing and Community Renewal (DHCR) may consider the rent paid to be a rent overcharge.

In a recent DHCR case, a tenant paid $15,000 in advance for the first year's rent and then paid the next six months in advance at $7,500. When the tenant complained of a rent overharge, the owner claimed that the advance payment was voluntary and didn't constitute an overcharge. The tenant countered by saying that it wasn't voluntary, and the lease stated that the tenant “shall” pay the first year's rent in advance.

The DHCR ruled for the tenant and ordered the owner to refund interest on the advance rent payments [Pachelli, December 2009].