Landlord Didn't Disclose That Contractor Was Its Employee

Landlord applied for MCI rent hikes based on installation of front, vestibule, and courtyard doors at its building. The DRA ruled for landlord. Tenants appealed and won.

Tenants claimed that there was an undisclosed relationship between landlord and its contractor. DHCR Operational Bulletin 2017-1 provides for stricter scrutiny of an MCI application when there is an identity of interest between a landlord and the person or entity that performed the MCI work, including "When the person or persons receiving payment for the MCI (either equipment or labor) appear to be employees of the owner/managing agent but such payments to them are in addition to such salary or payments for other work provided to the owner/managing agent."

In this case, the owner failed to disclose an identity of interest between the owner's managing agent and the contractor paid to perform the MCI installation. All cancelled checks submitted to the DRA were issued directly by the managing agent to the contractor. The president of the contracting company stated in a prior affidavit that he was an employee of the management company. This person also was listed in a letter to tenants providing contact information in case of emergency.

The DHCR revoked the MCI increase due to the owner's undisclosed relationship with the contractor and efforts to clearly and willfully downplay the relationship. This rendered landlord's submitted documentation of the MCI costs insufficient.

Various Tenants of 88-06 Parsons Boulevard: DHR Adm. Rev. Docket No. GO130021RT (8/17/22)[3-pg. document]