Rent Overcharge with Triple Damages Based on Unproven IAIs Totaled Over $300,000

Tenant, who moved into an apartment at a monthly rent of $4,000 in March 2014, complained of rent overcharge in 2015. Landlord claimed that when the prior tenant moved out in December 2013, landlord made individual apartment improvements (IAIs) costing $104,390. Landlord argued there was no overcharge based on a 16.25 percent vacancy increase, 12.6 percent longevity increase, and a 1/40th IAI rent increase. The DRA ruled for landlord and dismissed the complaint.

Tenant appealed and won. Tenant pointed out that, until landlord received a final notice of triple damages from the DRA, landlord had claimed the IAIs cost $33,000, and that proof for the additional claimed IAIs didn't add up. The DHCR agreed with tenant. Evidence submitted to the DRA was conflicting and contradictory, and the DRA failed to investigate further. Even when given a chance on PAR to clear up discrepancies, landlord failed to do so. Landlord's agent had submitted conflicting affidavits to the DRA at different times, claiming at first that the IAIs cost $33,000 while later claiming they cost $104,390. Landlord also failed to explain why two named individuals, both supposedly from the same construction company, had different addresses and submitted conflicting statements as to the work done. Landlord also had relied on four checks made payable to a different contractor 20 months after tenant moved into the apartment.

Landlord was entitled to an IAI rent increase based on work costing $33,000. The resulting rent overcharge, with triple damages, was $311,534.

Mays: DHCR Adm. Rev. Docket No. IW410026RT (10/21/21)[6-pg. document]