Landlord Can't Charge First Rent for Enclosing Balcony

Rent-stabilized tenant complained of a rent overcharge. His rent was $2,350 in 1988, when he took occupancy. He then learned that prior tenant's rent was $1,076. Landlord claimed that it was entitled to charge tenant a first stabilized rent because the apartment had been altered to such an extent that it was a new apartment. Landlord had enclosed the apartment balcony, enlarging the bedroom and creating a greenhouse. The DRA ruled for tenant, finding that landlord wasn't entitled to a first rent. The DRA also found that the overcharge was willful and assessed triple damages. Landlord appealed. The DHCR ruled against landlord on the issue of the first rent. Since the new interior space was a different use of pre-existing exterior space that was part of the existing apartment, no new unit was created. But given the amount of work done, landlord had good reason to believe that it may have been entitled to a first rent. So there was no willful overcharge and the triple damages were revoked. With the cost of the improvements added in, tenant's legal rent was $2,000.

Goldman: DHCR Adm. Rev. Dckt. No. IH 410022 RO (3/22/95) [3-page document]