Overcharge Based on Unsubstantiated 49-Year Longevity Increase Wasn't Willful

The DHCR's Tenant Protection Unit (TPU) did an individual apartment improvement (IAI) audit of tenant's rent-stabilized apartment and found that landlord's claimed IAIs didn't support the apartment's 2014 legal registered rent. The TPU then referred a rent overcharge complaint to the DRA. Landlord responded and still claimed it performed IAIs costing $27,840.

The DRA ruled for tenant, finding an overcharge commencing in 2014 that totalled $8,926, including triple damages. Landlord appealed, claiming that it was entitled to a longevity increase for 49 years, that the DRA improperly rejected its proof of IAIs, and that the overcharge wasn't willful. The DHCR ruled against landlord, who then filed an Article 78 court appeal.

The court ruled for landlord in part, finding that the DHCR arbitrarily and unreasonably found the overcharge was willful. Upon reconsideration, the DHCR removed the triple damages and charged interest on the overcharge. Since landlord reasonably believed it was entitled to a longevity increase going back to 1964 and it was unreasonable to expect landlord to have the original lease or rent receipts for prior tenant from that time, it was improper to find a willful overcharge. The total overcharge was $4,025.

Shapiro: DHCR Adm. Rev. Docket No. IN210005RP (7/22/20) [2-pg. doc.]