Insurance Proceeds Paid for Improvements

Tenant complained of a rent overcharge. Landlord charged a 1/40th rent increase for improvements made to the apartment and paid for by hazard insurance. The DHCR ruled for tenant, finding that he'd been willfully overcharged by landlord. The DHCR assessed triple damages against landlord, and landlord appealed. The trial court ruled against landlord, and landlord appealed again. Landlord claimed that the Rent Stabilization Association (RSA) had advised him that a 1/40th increase was proper and that he had no way of knowing he couldn't charge the increase. The appeals court found that the DHCR's rent overcharge ruling was reasonable. The cost of insurance was already factored into the rent-stabilized rent. Landlord didn't have to lay out money, which would entitle him to the 1/40th rent increase. But, landlord's rent increase wasn't a willful rent overcharge. He had no reason to know the increase was illegal. The overcharge amount was reduced.

Nagobich v. NYS DHCR: NYLJ, p. 22, col. 2 (1/11/94) (App. Div. 1 Dept.; Sullivan, JP, Carro, Rosenberger, Wallach, JJ)