Landlord Proved Apartment Was Vacancy-Deregulated Before Tenant Moved In

Tenant complained to the DHCR in 2018, claiming rent overcharge and improper deregulation of her apartment. The DRA ruled against tenant, finding that the apartment was legally vacancy-deregulated in 2012 before tenant moved in.

The prior rent-stabilized tenant's last legal rent of $1,277 was increased by an 18 percent vacancy increase, a 14-year longevity increase, and an IAI increase of $987.50, representing 1/40th of $39,500 spent on individual apartment improvements. So the legal regulated rent then exceeded $2,500, and landlord charged tenant a market rent of $3,000 per month when she moved in.

Tenant appealed and lost. She challenged the IAI rent increases, and claimed rent fraud, which would require the DHCR to look back more than four years. The DHCR noted that, since there was a claim of improper deregulation, the DRA already had looked back more than four years to determine how the unit was deregulated. Under DHCR Policy Statement 90-10, in effect when the IAI work was done, landlord was required to submit at least one form of proof, consisting of either cancelled checks, invoices marked paid in full, a signed contract agreement, or a contractor's affidavit. Landlord in fact submitted cancelled checks, an architect's affidavit, DOB filings, contractor's proposal, and contractor affidavit. Tenant claimed that landlord didn't include the IAI calculation in a lease rider when she moved in. But neither the Rent Stabilization Law nor the Code prohibited landlord from collecting an IAI increase if landlord failed to include the IAI calculation in the DHCR lease rider. DOB permits weren't required for electrical and plumbing IAIs performed in 2012. Landlord did show that the gut renovation work was filed with DOB by its architect. While a recent photograph showed that the kitchen floor was wood, and not ceramic as indicated in landlord's IAI itemization, this discrepancy didn't invalidate the IAIs. The kitchen had been fully renovated, a wood floor was installed, and there was no separate charge for ceramic flooring. Tenant submitted insufficient proof of a fraudulent scheme to deregulate the apartment. 

Bizzarri: DHCR Adm. Rev. Docket No. JT410041RT (12/9/21)[5-pg. document]