DHCR Disallowed Some Claimed IAI Costs Based on Inspection

The DHCR's Tenant Protection Unit (TPU) audited individual apartment improvements (IAIs) to tenant's apartment, then disallowed IAI costs and directed landlord to reduce tenant's rent. Landlord objected to doing so, and TPU then filed a rent overcharge complaint with the DRA. The DRA ruled for tenant and ordered landlord to refund $57,418, including triple damages and interest. The DRA disallowed $6,550 of landlord's claimed $33,000 IAI costs.

Landlord appealed, and the DHCR denied landlord's PAR. Landlord then filed an Article 78 court appeal. The DHCR and landlord agreed to send the case back to the DRA for further processing. The DHCR then provided landlord with a copy of TPU's Inspection Report, which may not previously have been provided to landlord. Landlord submitted no response.

The DHCR again ruled against landlord and upheld the partial IAI disallowance. The disallowance was based on a DHCR inspection report stating that some of the IAIs weren't performed. The inspection report found that landlord didn't relocate the drain and water pipes, didn't install 340 linear feet of base board and top moldings through the apartment, didn't install a drop ceiling in the bathroom, and didn't renew all electrical systems. The DRA therefore correctly disallowed the $6,550 claimed cost of these items. The DHCR's inspection report was stronger proof than landlord's architect statement to the contrary. And, even if TPU didn't provide this inspection report to landlord previously, landlord was given a full opportunity to respond when the case was remanded from court, and failed to do so.

Sovereign Realty Co.: DHCR Adm. Rev. Docket No. FX410005RP (11/9/18) [4-pg. doc.]