Landlord Not Entitled to First Rent for New Apartment

Tenant complained of rent overcharge. Landlord claimed that it was entitled to a first rent because it had added two bedrooms to tenant’s apartment. The DRA ruled for tenant and ordered landlord to refund $28,790, including triple damages and interest. The DRA found that landlord wasn’t entitled to a first rent because the apartment’s dimensions hadn’t changed. But landlord was entitled to Individual Apartment Improvement (IAI) rent increases. Landlord appealed and won, in part. The DHCR again ruled that landlord wasn’t entitled to a first rent, but revoked the triple damages. Landlord and tenant both filed Article 78 court appeals. The case was sent back to DHCR for further consideration. The DHCR added an additional rent increase for increasing the living space, and added back the triple damages. Tenant then filed another Article 78 petition. The court sent the case back to DHCR to recalculate the approved IAI costs because the agency improperly increased the IAI cost for increased living space. Tenant filed a further appeal, and the Appellate Division affirmed the lower court ruling.

The DHCR then took the case back and ruled against landlord. Landlord unsealed a doorway that led to additional bedrooms which were then incorporated into the previously existing apartment. A first rent applies only where perimeter walls of an apartment have been substantially moved and changed and where the previous apartment essentially ceases to exist. Here the courts also had ruled that granting an IAI rent increase based on the increased living space was improper. After recalculating the IAI costs, the refund due to tenant was reduced to $19,800.

Marrone: DHCR Adm. Rev. Docket No. EP210002RP (5/20/16) [6-pg. doc.]