Rent Overcharge Due to Discounted IAI Rent Increases Wasn't Willful

Tenant complained of rent overcharge in 2010. The DRA ruled against tenant, who appealed and won in part. The DHCR disallowed some of landlord's claimed individual apartment improvements (IAIs), which had been applied to prior tenant's rent in 2007, and directed landlord to refund $3,491, including interest. Tenant then filed an Article 78 court appeal, and the court sent the case back to the DHCR to further consider landlord's IAI claims. The DRA then ordered an apartment inspection. After inspection, the DRA permitted a rent increases based on IAIs costing $12,178 and disallowed another $6,875 in claimed costs. The total overcharge with interest was $4,725. Landlord owed tenant $1,150 due to rent arrears.

Landlord and tenant then both appealed and lost. Tenant claimed that landlord didn't use a licensed contractor for its IAIs and that triple damages should be applied to the overcharge. But IAIs performed in 2007 didn't require a licensed contractor and there was no proof that the work wasn't done. The overcharge wasn't willful. Landlord did perform substantial work in the apartment before tenant moved in, as confirmed by the DHCR's inspector. The DHCR also rejected landlord's claim that the longevity increase granted should date back to 1970. There were no rent records that supported landlord's claim that the prior tenancy started in 1970. The DRA reasonably relied on rent registration records to set the longevity increase starting in 1984. The DRA also properly rejected any rent increase for a one-year renewal lease for the prior tenant that lasted only 15 days before prior tenant vacated and complaining tenant moved in.  The DHCR also noted that, while the DRA incorrectly applied a six-year (rather than four-year) base date in its remand decision due to 2019 HSTPA changes to the Rent Stabilization Law's rent overcharge provisions that were later revoked in April 2020 by the decision of New York's highest court in Regina Metro. v. DHCR, the error was harmless in this case and didn't affect the result.

Oglesby/Second Bronx LLC: DHCR Adm. Rev. Docket Nos. IM610024RT, IM610059RO (8/12/20) [5-pg. doc.]