Landlord v. Tenant: April 2024

MAJOR CAPITAL IMPROVEMENTS

Qualifying MCI Work Need Not Be Performed to Entire Building Complex

Landlord of a large apartment complex containing 35 buildings applied to the DHCR for MCI rent hikes at 12 buildings, based on installation of new roofs, facade restoration, and related engineering fees. The DRA ruled for landlord.

The Tenants Association appealed and lost. They argued that the MCI installations weren’t complex-wide and therefore didn’t qualify for rent increases. The DHCR found that tenants’ claim was incorrect. The Rent Stabilization Code permits landlords to file an MCI application to increase rents of a building or building complex where MCI work has been performed. There was no requirement to perform an MCI at all buildings in a multi-building complex. The MCI rent increases for the 12 buildings involved here were limited to tenants of those buildings.

• Phipps Garden Apartment Tenants Association: DHCR Adm. Rev. Docket No. LT130011RT (1/24/24)

MAJOR CAPITAL IMPROVEMENTS

Landlord Can Get MCI Increase for New Intercom System

Landlord applied to the DHCR for MCI rent hikes in 2011, based on installation of a new boiler, security system, intercom, and fencing. The DRA ruled for landlord in 2013, except that fencing costs were disallowed. Tenants appealed, and the DHCR denied their PAR in 2020. Tenants then filed an Article 78 court appeal, and the case was sent back to the DHCR for further consideration.

The DHCR ruled for tenants in part. The boiler work cost was now disallowed because the work was completed more than two years before landlord filed its MCI application. And a hazardous violation that existed at the time of the MCI application wasn’t corrected until Feb. 5, 2019. This altered the effective date of the MCI rent increase. Tenants then filed another Article 78 court appeal of the modified DHCR decision.

The court ruled against tenants, finding that the DHCR’s decision was rational. Tenants had failed to prove to the DHCR that landlord had altered apartments and thereby the room counts for MCI increases. Tenants also objected to an MCI increase for the intercom installation, which the DHCR had approved in a prior service modification order. But nothing precluded landlord from subsequently seeking an MCI rent increase after the DHCR approved modification of intercom service at the building.

• 10 W. 65th St. Tenants Ass’n v. DHCR: Index No. 154859/2023, 2024 NY Slip Op 30005(U)(Sup. Ct. NY; 1/2/24)

RENT STABILIZATION COVERAGE

Apartment Became Rent Stabilized After 10-Year Temporary Exemption

Tenant complained to the DHCR in 2018 of rent overcharge and improper deregulation of her apartment. The DRA ruled against tenant, finding that the unit was deregulated in 2009, which was prior to the 2014 base rent date.

Tenant appealed and won, in part. The DHCR found that the apartment was rent stabilized, that there had been a small overcharge of $13,632, including interest, but that there had been no fraudulent scheme to deregulate the apartment. 

Before tenant’s occupancy, the apartment was temporarily exempt from rent stabilization due to owner occupancy. When landlord subsequently resumed renting the apartment, the unit returned to rent-stabilized status under RSC §2526.1. The code provided at that time that, while a first rent after a temporary exemption may be the rent agreed to by the landlord and the first tenant after such exemption, such rent must be a rent-stabilized rent. RSL §26-504.2 further stated that, for there to be high-rent vacancy deregulation, the “legal regulated rent” must exceed the deregulation threshold.

Because the first tenants after temporary exemption weren’t treated in this case by landlord as rent-stabilized tenants, either by lease or registration, there was no “legal regulated rent” that could be the basis for deregulation of the apartment. So, there could not have been a legitimate high-rent vacancy deregulation in this case even though the actual rent exceeded the deregulation threshold. So the apartment remained, and remains, rent stabilized. Applying a four-year base date, the $2,550 rent charged in 2014 became the legal regulated base date rent. The DHCR found a subsequent, non-willful rent overcharge.

• Mccarron: DHCR Adm. Rev. Docket No. LR210010RT (1/25/24)