Some Claimed IAI Costs Were Insufficiently Documented

Tenant complained to the DHCR of rent overcharge and a lease violation, claiming that his apartment had been improperly deregulated. Landlord argued that the unit was vacancy-deregulated after adding a 1/40th rent increase for individual apartment improvements (IAIs) resulting in a vacancy-deregulated rent to tenant of $2,750. The DRA ruled for tenant, finding that the apartment was rent stabilized and that the total overcharge with triple damages was $4,580. But, since tenant owed back rent totalling $6,645, no refund was due to tenant. The DRA approved IAI costs claimed by landlord in the amount of $41,000 but disallowed $28,000 for materials, flooring, and a door. The resulting permissible rent increase yielded a legal regulated vacancy rent of $2,298, which was below the deregulation threshold applicable at the time.

Landlord appealed and lost. The DHCR wouldn't consider new evidence of flooring and other costs submitted for the first time with landlord's PAR. Landlord hadn't shown a reasonable excuse for failing to submit the new proof to the DRA, even though the case had been pending before the DRA for six years before it was decided. And DHCR Operational Bulletin 2016-1 specifies what must be shown to document IAI costs. It was reasonable for the DRA to disallow $16,000 of materials listed on a credit card statement that supplied listed general charges to merchants but didn't specifically tie the costs to tenant's apartment. The DRA also reasonably disallowed $5,000 in floor costs because the flooring company's invoice didn't include an apartment number. Another $4,100 was reasonably disallowed because there was no canceled check correlating to the claimed work and it duplicated work billed by another contractor. Landlord also disputed the assessment of triple damages but failure to submit adequate documentation of IAIs wasn't legal grounds to dismiss triple damages.

Marion Equities LLC: DHCR Adm. Rev. Docket No. KP210039RO (12/7/22)[7-pg. document]