Claimed IAI Increase Disallowed Due to Lack of Landlord's Credibility

Rent-stabilized tenant complained of rent overcharge. The DRA disallowed rent increases claimed by landlord for individual apartment improvements (IAIs) and found a rent overcharge. Landlord appealed and lost. Landlord then filed an Article 78 court proceeding, claiming that the DHCR's decision was arbitrary and unreasonable. The DHCR agreed to take the case back for reconsideration. The DRA then ruled for tenant and directed landlord to refund $266,218 in overcharges, including triple damages.

Landlord appealed and lost. Landlord claimed that it had performed a gut renovation of the apartment after the prior 34-year tenancy. And the prior orders in this case had found that $36,600 of landlord's claimed IAI costs were permissible. But the case had been sent back to the DHCR by the court for reconsideration and a new ruling on tenant's overcharge claim. So the DRA properly made a new ruling. Among other factors considered on remand were that the building super was paid to do the IAI work and it wasn't clear whether payment to the super was in addition to and separate from the normal payment he would have received as wages. Landlord's claim that it spent exactly $40,000 on the IAIs also was contradicted by checks totaling $37,955 and other documentation amounting to $47,300. A claimed IAI lease rider also wasn't dependable and undermined landlord's overall credibility. Landlord also originally claimed that the prior tenancy had been for 51 years, rather than 34 years. So, the DRA was correct to find that landlord failed to establish credibility regarding the work performed and the cost for such work, and correctly disallowed the entire IAI increase claimed.

Giovanni 86 LLC: DHCR Adm. Rev. Docket No. MO210003RO (10/25/24)[6-pg. document]