Court Orders DHCR to Reconsider Landlord’s Proof of IAIs

Rent-stabilized tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $20,650, including interest. Landlord appealed and won, in part. The DHCR found that most of landlord’s claimed individual apartment improvements (IAIs) were instead repair and maintenance items, but that the DRA hadn’t properly figured Rent Guidelines Board Order #41 in calculating tenant’ rent. This reduced the total overcharge by $1,000. Landlord then filed an Article 78 court appeal, claiming that the DHCR unreasonably disallowed its IAI costs.

The court ruled for landlord and ordered the DHCR to reconsider and to inspect the apartment. Landlord had submitted cancelled checks proving payment of $15,000 to a contractor plus proof of other payment for electrical upgrading, cabinets, and flooring materials. The court found the DHCR’s decision was irrational and that it was “arbitrary and capricious” for the DHCR to reject landlord’s renovation costs without justification. The DHCR ruled that, while sending the case back to the DRA for review, the rent set in the PAR order would remain in effect, but any refund was stayed.

Chrismar Equities Corp.: DHCR Admin. Rev. Docket No. DX110007RP (1/12/16) [3-pg. doc.]