Landlord Proves No Financial Connection Between Itself and Its Contractor

Tenant complained to the DHCR in 2018 of rent overcharge and improper apartment deregulation. The DRA ruled against tenant. The DRA found that tenant moved in on July 1, 2018, at a legal rent of $3,700 after landlord collected a lawful rent increase of $1,941.66 for individual apartment improvements (IAIs) performed before tenant moved in. The IAIs cost $116,500. Although there was an identity of interest between landlord and its contractor, there was no proof that there was any common ownership or financial connection between landlord's business and the contractor's business.

Tenant appealed and lost. Landlord always maintained, and ultimately proved, that there was no financial connection between its owner entity and the contractor, even though there was a family relationship between the two. DHCR Operational Bulletin 2016-1, in effect at the time, required only that such circumstances "may require" additional proof. Among other things, checks paid to the contractor were paid at the time the work was done and matched the total sum charges from the contractor's invoice. 

Levy: DHCR Adm. Rev. Docket No. LQ210026RT (10/4/23)[8-pg. document]