Landlord Didn't Document Cost of IAIs

The DHCR's Tenant Protection Unit (TPU) commenced an individual apartment improvements (IAI) audit and asked for proof justifying IAI rent increases collected by landlord. Landlord submitted some records, and claimed that it paid $50,000 for IAIs, including $30,000 in cash. For this reason, TPU conducted an apartment inspection. The TPU's Audit Determination Notice disallowed landlord's claimed IAIs and directed landlord to reduce tenant's rent and refund an overcharge. Landlord requested reconsideration, but the TPU referred the case to the DRA for a rent overcharge proceeding. The DRA ruled for tenant and ordered landlord to refund $117,000, including triple damages and interest.

Landlord appealed and lost. Landlord failed to submit proof of payment or purchase of over 75 percent of the materials claimed it used for IAIs. So the DRA correctly disallowed any IAI increase. There was no denial of due process to landlord since Rent Stabilization Code (RSC) Section 2527.2 allows the DHCR to initiate TPU audits. The Rent Stabilization Law (RSL) also contemplates the DHCR commencing overcharge complaints on its own initiative. The RSL and RSC both authorize the DHCR to commence investigations. Landlord also didn't respond to requests for additional information from the TPU and from the DRA. 

Sha Realty: DHCR Adm. Rev. Docket No. ER210040RO (10/24/17) [9-pg. doc.]