Landlord Proved Rent Increase for IAIs

Tenant complained of improper apartment deregulation and rent overcharge. The DRA ruled against tenant, who appealed and lost.

Tenant moved into the apartment in 2006 under an unregulated lease for $2,500 per month. Tenant filed her overcharge claim in September 2017. Landlord showed that the last rent-stabilized rent for the apartment was $1,639 in 2004. When that tenant moved out, landlord performed individual apartment improvements (IAIs) that cost $11,000. Landlord then rented the apartment to prior tenants who paid $2,000 per month and were unregulated. Their vacancy rent was based on a 17 percent vacancy increase plus $275, representing 1/40 of the IAI cost. The apartment therefore was deregulated as of May 1, 2005. As noted by the DRA, the Court of Appeals' ruling in the case of Altman v. 285 West Fourth LLC affirmed landlord's right to deregulate the apartment at that time. And, while tenant argued that much of landlord's work to the apartment in 2005 was repair and painting work, landlord did document installation of windows, windowsills and frames, baseboards, a microwave, and related electrical work for new appliances. Landlord only needed to justify IAI work costing $3,300 to push the legal rent over the deregulation threshold, which it did. And even if the IAI increases were excluded from the prior tenant's legal rent in 2005, the rent would still have increased beyond the deregulation threshold when the complaining tenant moved in.

Davidson: DHCR Adm. Rev. Docket No. HR410026RT (2/4/20) [3-pg. doc.]