N.Y.C. Admin. Code tit. 26, ch. 3 § 26-407
Labor cost pass-along (City Rent and Rehabilitation Law)
Operative Text
a. Notwithstanding any provisions of this chapter, any labor cost pass-along rent increase requested of, or received from, any tenant on or after July first, nineteen hundred seventy-two, pursuant to the provisions of subparagraph (1) of paragraph one of subdivision g of section 26-405 of this title, shall not exceed the maximum rent adjustment as provided under this chapter after the effective date of this section. b. All such increases in excess of such maximum rent are hereby declared null and void and of no effect. A tenant who paid any such excess increase shall be repaid by a cash refund or credit, to be applied against future rent, in equal installments for the same number of months for which such increase was actually collected, commencing on January first, nineteen hundred seventy-eight.
Section 26-407 of the N.Y.C. Administrative Code places a ceiling on rent increases tied to labor cost pass-alongs, limiting them to the maximum rent adjustment permitted under the rent stabilization chapter. Any amount collected above that ceiling is declared legally void, and tenants who overpaid are entitled to repayment—either as a cash refund or as a credit applied against future rent—spread in equal installments over the same number of months during which the excess was collected. This provision applies to labor cost pass-along increases requested or received on or after July 1, 1972, with the repayment obligation commencing January 1, 1978.
Plain English — not legal advice.
Under § 26-407, compliant operators ensure that any labor cost pass-along rent increase tied to subparagraph (1) of paragraph one of subdivision g of § 26-405 does not exceed the chapter's maximum allowable rent adjustment. Operators who collected amounts above that ceiling are generally expected to have issued cash refunds or applied credits against future rent in equal monthly installments. Maintaining clear records of how labor cost pass-along increases were calculated and collected is a standard practice for demonstrating compliance with this provision.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Section 26-407 establishes that tenants who were charged labor cost pass-along rent increases above the legally permitted maximum are entitled to repayment of the excess amount, either as a cash refund or as a rent credit applied in equal installments. Tenants who believe they were overcharged under the labor cost pass-along provisions of § 26-405 may consider raising this provision as a defense in a rent proceeding or filing a complaint with the New York State Division of Housing and Community Renewal, which oversees rent stabilization matters. Consulting a tenant-rights organization familiar with N.Y.C. rent stabilization law can help clarify what records and documentation are typically relevant to such a claim.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated October 14, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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