IAI Rent Hike Challenges: Recent Decisions

Tenants often challenge rents that reflect increases landlords include after making individual apartment improvements (IAIs). Not only are there complicated rules for calculating how much a landlord can increase the rent for improvements, but the landlord also has the burden of maintaining records that prove those improvements were indeed made and properly paid. Landlords who follow the rules are winning tenant claims of IAI-related rent overcharge and fraud, as this recent case shows.

Use of Unlicensed Contractor Didn’t Bar Rent Hike for IAIs 
Rent-stabilized tenant complained of rent overcharge in February 2019. The DRA found no overcharge and dismissed the complaint. 

Tenant appealed and lost. Tenant claimed that the last prior rent before she moved in was $898 per month, she initially paid $2,219 per month, and landlord didn’t prove the claimed individual apartment improvements (IAIs). Tenant also claimed rent fraud. 

The DHCR noted that the four-year base date applied to this pre-HSTPA complaint. And the DHCR found tenant didn’t present proof to support her claim that the pre-base date IAIs performed in early 2014 were fraudulent. The absence of a rent-stabilized lease rider attached to tenant’s vacancy lease, by itself, was insufficient proof of fraud. And landlord produced an itemized contractor invoice and proof of payment to support the pre-base date IAI rent increases. Landlord’s contractor also submitted a sworn statement that he was paid in full $43,000 for the IAIs. 

Tenant also argued that landlord’s contractor wasn’t licensed. But the DHCR had no jurisdiction to enforce local laws regarding the licensing of home improvement contractors. Prior DHCR decisions ruled that employment of an unlicensed contractor didn’t bar a landlord from receiving IAI rent increases.

  • Cukrov/Mackay: DHCR Adm. Rev. Docket No. JU210013RT (1/12/22)

Lesson Learned: Maintain scrupulous records of IAIs, such as cancelled checks, invoices marked paid in full, signed contractor’s agreements and affidavits, and DOB filings.


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February 24, 2022 — The Habitat Group
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