Rent Overcharge Resulting from Missing IAI Documentation Wasn't Willful

Rent-stabilized tenant complained to the DHCR of rent overcharge in 2018, noting that the apartment rent had increased from $765.82 to $1,500 when he moved into the unit in 2015. Landlord answered that the tenant's vacancy lease rider explained the grounds for the vacancy increase, which included individual apartment improvements (IAIs). The DRA ruled for tenant because landlord didn't submit bills or invoices documenting the cost of the claimed IAIs. The DRA ordered landlord to refund $59,236, including interest and triple damages. This was the amount due after giving landlord a credit for $24,412 in rent arrears. 

Landlord appealed and won in part. The DRA properly disallowed the IAIs because landlord didn't produce bills and invoices concerning the materials purchased for installation in the apartment. The bank statements showing debit card purchases, although contemporaneous with the work, have to be matched to bills and invoices so that the DRA could assess what materials were actually purchased and how and if they were used in the apartment. Landlord's affidavit wasn't enough to make up for the missing information. However, the DHCR found that the overcharge wasn't willful and that triple damages weren't warranted. There was no dispute that the apartment was gut-renovated and photographs supported landlord's IAI claim. As previously ruled by the DHCR, an overcharge resulting from the disallowance of IAIs based on a landlord's inadequate documentation isn't willful. The amount still due to tenant was reduced from $59,236 to $18,003.

East 53rd 1069 LLC: DHCR Adm. Rev. Docket No. LR210040RO (10/3/23)[3-pg. document]