Landlord Wasn't Entitled to 'Large Project' Exemption

Facts: Tenant complained of a rent overcharge. His initial rent was $2,400 per month. Prior tenant's rent-stabilized rent was $865. Landlord claimed that it had gut renovated tenant's apartment at a cost of over $56,000. To support its claim, landlord submitted a signed contract and canceled checks. The contract listed 13 items included in the gut renovation and a total dollar amount but didn't specify the cost of each item. Tenant claimed that some of the work listed was never done and hired a professional engineer to estimate the total cost of the renovation. The professional engineer estimated that the total cost was $21,500. The DRA ruled for tenant, allowing landlord to collect a rent increase based only on the engineer's estimate of $21,500. The DRA ordered landlord to refund $26,000, including triple damages. Landlord appealed, claiming that in other cases, the DHCR has applied a ''large project'' exemption allowing the full cost of large gut renovation projects without requiring landlord to itemize the cost of each item. DHCR: Landlord wins in part. The DHCR doesn't apply the large project exemption when, as in this case, a lot of the items could be maintenance and repair. Also, the DHCR doesn't apply the exemption when a tenant claims that some work was never done. But landlord showed that it reasonably believed it was entitled to the full increase it collected. There was no willful overcharge, and the DHCR revoked the triple damages.

Stellar PWV Mgmt.: DHCR Adm. Rev. Dckt. No. QG410014RO (7/14/03) [4-pg. doc.]