Landlord Proved Apartment Improvements

Facts: Landlord sued to evict unregulated tenant for nonpayment of rent. Tenant claimed that he was rent stabilized and that landlord overcharged him. Landlord claimed that prior tenant’s rent was $920, that it spent $50,000 to renovate tenant’s apartment, and that, since the new legal rent was more than $2,000, tenant was exempt. The trial court ruled against landlord, but the first and second appeals courts reversed. Landlord proved that it paid a contractor $50,000 for an extensive renovation and didn’t need to break down the costs to distinguish between improvements and repairs. Tenant then appealed to New York’s highest court, which ruled that there was no set rule on whether landlord had to break down the renovation costs, but sent the case back to make a determination on the facts in this case.

Court: Landlord wins. Landlord proved at trial that it spent at least $30,000 on apartment improvements, including installing new kitchen cabinets, countertops, appliances, and a ceramic tile floor; replacing kitchen and bathroom plumbing; rewiring the apartment’s electrical lines and replacing electrical outlets, switches, and fixtures; and replacing moldings. The other $20,000 was attributable to repair items included repairing kitchen underflooring, repairing walls, refinishing wood floors, and plastering and painting the entire apartment. The new legal rent before tenant moved in was still more than $2,000, so tenant wasn’t rent stabilized.

Jemrock Realty Co. LLC v. Krugman: NYLJ, 4/8/10, p. 35, col. 3 (App. Div. 1 Dept.; Saxe, JP, Sweeny, McGuire, Renwick, Freedman, JJ)