No First Rent Where Apartment Size Increased by 27 Square Feet

Landlord sued to evict tenants for nonpayment of rent. Landlord argued that it could charge tenants a first rent based on substantial alterations it had made to tenants' apartment. The apartment had new bathroom and kitchen fixtures, and the outer walls had been enlarged to include a closet from an adjacent apartment. Tenants claimed that they'd been overcharged. The trial court agreed, and imposed triple damages. Landlord appealed, and the appeals court ruled for tenants, in part. Landlord had only added 27 square feet from the closet in the other apartment. This didn't qualify as a newly created unit entitling landlord to a first rent. But landlord doesn't have to pay triple damages because it had justifiably relied on prior similar DHCR rulings that allowed a first rent when a landlord added space by removing a closet. And there was no evidence to show that landlord knew its actions were improper.

Roker Realty Corp. v. Gross: NYLJ, p. 27, col. 2 (1/9/95) (App. T. 1 Dept.; Parness, JP, McCooe, Glen, JJ)