Rent Increases for Unproven IAIs Were Properly Disallowed

Tenant complained of rent overcharge and landlord's refusal to give her a rent-stabilized renewal lease. Tenant moved into the apartment in 2005 under a one-year lease at $1,300 per month. Landlord claimed that the apartment was deregulated. The DRA ruled that the apartment was rent stabilized; that the legal regulated rent in 2017 was $1,575; and that landlord wasn't permitted to collect IAI rent increases in 2005 because of insufficient proof. No refund was due because tenant's $35,000 rent arrears were greater than the $150 rent overcharge.

Landlord and tenant both appealed and lost. Tenant claimed that landlord committed fraud by giving her an unregulated lease with a preferential rent and that the DRA should look back beyond the base date to examine the apartment rent. But a prior DHCR order had set the apartment's legal rent in 2005. Tenant was in fact charged less than landlord could have charged if all legal rent increases were collected since the prior DHCR order was issued.

Landlord argued that the IAIs performed in 2005 shouldn't have been disallowed. But the contractor's invoice signed in 2017 was contemporaneous with the work allegedly done in 2005. DHCR inspection showed that vinyl floors weren't installed, so $6,900 was properly disallowed for this item. Combined costs of $13,000 for demolition and garbage removal were properly disallowed because the IAIs didn't involve a gut renovation of the apartment. New Sheetrock and painting costing $10,000 was a repair, not an IAI. A new toilet costing $300, without any other bathroom renovations, was properly disallowed as a repair. A cost of $800 for new windows was disallowed because the apartment had only one window that apparently was defective and landlords' invoice didn't describe the type of window installed. And a general description of a "new kitchenette" at a cost of $3,000 was insufficient to support an IAI increase for kitchen  work. 

Hefti/93rd Building Corp.: DHCR Adm. Rev. Docket Nos. HO410006RO, HO410024RT (10/31/19) [5-pg. doc.]