Landlord Didn't Prove Building Was Substantially Rehabilitated

In response to a rent overcharge complaint filed by tenant, landlord claimed that the building was exempt from rent stabilization based on substantial rehabilitation completed in 2007. The DHCR then opened a "UC" proceeding to determine the building's status. The DRA ruled against landlord, finding that the work performed didn't qualify as a gut renovation.

Landlord appealed and lost. Submitted DOB records, including architectural plans and safety notes, indicates that construction work was confined to affected apartment interiors, and construction operations didn't involve interruption of heating, water, and electrical service for tenants. Landlord submitted no sworn statement from an architect to the contrary. And, while cost isn't determinative by itself, landlord's $10,000 cost estimate for the work was so disproportionate to the actual cost of a substantial rehabilitation that it indicated that there was no such rehab. Undated, unverified photographs submitted by landlord also conflicted with DOB records of what work was done. Landlord failed to prove that 75 percent of apartment and building-wide systems were replaced. 

270-274 East 2nd Residences LLC: DHCR Adm. Rev. Docket No. FT210004RO (3/26/18) [8-pg. doc.]