Rent Increase for IAIs Paid for by Insurance Proceeds Disallowed

The DHCR's Tenant Protection Unit (TPU) conducted an audit of an apartment's rent based on registered rent showing that a rent increase was based on individual apartment improvements (IAIs). TPU determined that the claimed IAIs didn't support the 2014 rent increase, and disallowed $32,000 in claimed IAI costs in part because the renovations were due to fire damage and landlord didn't provide any proof of its insurance claim or recovery proceeds. TPU directed landlord to reduce the monthly rent from $1,997 to $1,174 and refund overcharges to tenants. When landlord failed to respond, TPU filed a rent overcharge complaint with the DRA. The DRA ruled for tenants and ordered landlord to refund $77,452, including triple damages.

Landlord appealed and lost. Landlord had signed a settlement agreement with tenants before they moved out of the apartment. But this was done after TPU already had filed its complaint with the DRA and didn't receive DHCR or court approval. Tenant also wasn't represented by an attorney. But the DHCR noted that the DRA's order was based on retroactive application of HSTPA rent overcharge provisions that were overturned by New York's highest court in the April 2020 Regina Metropolitan case. So the total period that triple damages applied was reduced, and the refund due to tenants was $66,889. 

Manhattan Building Management, LLC: DHCR Adm. Rev. Docket No. HW410012RO (10/26/20) [4-pg. doc.]