Landlord Related to IAI Contractor Proved Costs of 2018 Improvements

Rent-stabilized tenant complained to the DHCR of rent overcharge in 2018. Tenant said the apartment rent was increased before he moved in based on landlord's false claims concerning individual apartment improvements (IAIs) costing $116,500. The DHCR ruled against tenant, who then filed an Article 78 court appeal. Tenant argued that the DHCR's decision was arbitrary and unreasonable.

The court ruled against tenant, finding that the DHCR's decision was reasonable in light of DHCR Operational Bulletin 2016-1. OB 2016-1, issued in May 2016, required that IAI costs paid to a person or organization that shared an identity of interest with the owner or managing agent may require additional proof relating to cost and payment. In applying this operational bulletin, the DRA examined additional evidence, such as affidavits, itemized invoices, and checks, and undertook additional scrutiny of the IAI costs and payments. The DHCR reasonably applied OB 16-1 in making its decision.

Levy v. DHCR: Index No. 507268/2023, 2024 NY Slip Op 33059(U), NYLJ No. 1725498628 (Sup. Ct. Kings; 8/21/24; Ottley, J)