waiting game

Tenants Hire Contractors to Help Back Rent Overcharge Claims

A row of residential buildings in Harlem, Oct. 8, 2019.
A row of residential buildings in Harlem, Oct. 8, 2019. Photo: Ben Fractenberg/THE CITY

Sign up for “THE CITY Scoop,” our daily newsletter where we send you stories like this first thing in the morning.

While enduring epic waits for the state to decide on rent overcharge claims, antsy tenants are taking action — hiring contractors to double-check their landlords’ math in hopes of swaying bureaucrats to order refunds.

A new rent law that substantially increases the potential payout is raising the stakes for landlords and tenants alike.

“If I were to get an overcharge [finding], it would be almost $130,000,” one Upper Manhattan tenant told THE CITY as she awaits word on her case. “So it’s a lot.”

Before the new state rent regulations went into effect this summer, landlords had broad latitude to pass along the price of apartment renovations to tenants.

The new Housing Stability and Tenant Protection Act sharply limits the rent hike — capping the cost to tenants at $15,000 and only allowing such increases once every 15 years.

The statute also expands the period reviewed for possible rent refunds to up to six years, from four. And landlords found to have willfully overcharged tenants can face triple penalties — based on six years of rent payments, up from two years.

Tenants are gambling by hiring independent contractors to reassess landlord claims: DHCR hasn’t decided whether it will take the expert opinions into consideration, an agency spokesperson said.

But some of the two dozen tenants who responded to a request from THE CITY for stories about contesting rents said they’re willing to take the chance.

‘They Cheat’

The Upper Manhattan tenant — a housing attorney who did not want to be identified for fear of landlord retribution —said she’s not after money as much as accountability.

“To me, it’s not about the rent because we can completely afford the rent — it’s the principle of it,” she said. “As a housing attorney, it’s just the principle of it because they cheat.”

DHCR, which oversees nearly a million rent-stabilized apartments, provides little guidance on how to file an overcharge case, she said.

Instead, she has relied on her own research, with the help of a paralegal.

“I just don’t know how anyone who’s a layperson would even do it,” she said.

Some of the paper work involved in upper Manhattan attorney's overcharge complaint against her landlord.
Some of the paper work involved in upper Manhattan attorney’s overcharge complaint against her landlord. Photo: Courtesy of Tenant

First, the woman studied court decisions. Then she hired an independent contractor to check whether her landlord’s $36,000 apartment upgrade claim — the basis of a roughly $1,000 rent hike —  stood up to scrutiny.

The contractor, who spent about a half hour walking around the two-bedroom apartment taking pictures, estimated the renovations cost less than half of what the landlord had claimed.

The lawyer has lived in the apartment since 2013. If she’s successful in her challenge, she would get a rent reduction from the more than $2,500 she pays. She’d also reap a credit for every dollar collected above the legal regulated rent — plus a penalty equal to three times the overcharged amount.

The contractor’s appraisal cost her nearly $1,800, but was worth it given the $130,000 at stake, the woman said.

A Pile of Paperwork

In the 16 months since she first filed the complaint, she’s submitted a stack of paperwork well over an inch think to the state housing agency. Her landlord has filed nearly as many documents.

That includes the landlord’s renovation receipts, which are only reviewed after a tenant files an overcharge complaint, according to DHCR.

Under the new rent laws, DHCR will have to determine whether costs associated with apartment improvements are “reasonable” — and come up with new regulations to establish “reasonability.” The new standards would apply to pending overcharge complaints, the agency said.

Under the old rent laws, landlords could avoid penalties by settling with a tenant before DHCR or a court made a decision. That’s no longer true under the new law — giving landlords additional incentive to seek delays in hopes that renters move on, tenant advocates say.

“These landlords, they hire big firms. They keep putting in a response to everything,” the Upper Manhattan tenant said. “At this point we have nothing left to argue and they’re just rehashing the same arguments to drag it out to see if maybe we’ll just give up and move on.”

A $500 Rent Hike

Andrew Gerst and his wife are nearly two years into their overcharge case, which began when they learned the previous tenant in their Harlem one-bedroom was paying just over $900 per month — about $500 less than them.

In addition to imposing an 18% vacancy increase, their landlord also claimed to have made a “complete renovation” to the kitchen and bathroom that ran $18,900. A portion of that cost was factored in to each month’s rent, according to a formula in the old state law.

Add it all up, and the roughly $1,400 rent was actually lower than what could legally be charged, the landlord asserted in the lease agreement.

The couple looked around and decided the numbers couldn’t possibly be right. Perhaps, they thought, they would be entitled to a refund.

“Our apartment is not that nice,” Gerst said. “We really did not think that there was any way the landlord could have possibly spent [more than] $18,000 on this apartment. That being said, you know, I’m not a construction expert.”

So they got one.

The contractor they found online poked around and identified items that appeared to have been freshly installed: some new cabinets, along with a new fridge and a gas stove. New floors had been laid down in the kitchen, bathroom and hallway, and the walls and ceilings had been painted.

The contractor estimated that the landlord had spent about $6,000 in upgrades — less than a third of what the owner had claimed.

“We wanted to make sure before — you know — we poke the hornet’s nest, if you will, by filing an overcharge complaint,” Gerst said.

Wait Approaches Two Years

Gerst’s wife, who did not want to be identified, filed a complaint with DHCR in late 2017, contending their landlord was overcharging them. They also submitted the contractor’s review, in hopes of bolstering their case.

Nearly two years later, Gerst and his wife are still waiting — paying rent, based on the contested repairs, that has risen to more than $1,700 a month.

They did receive an acknowledgement from DHCR in July: The agency was seeking additional information, covering the extended six-year time period for review.

That didn’t help them, since they hadn’t lived in their apartment that long — “which DHCR could have known by actually reading our rent overcharge complaint,” Gerst said.

It was just one in a long line of frustrations.

“I tried to call DHCR numerous times and got lost in some endless phone tree — nobody ever picked up,” Gerst recalled.

He has reached out to his local elected officials and the public advocate’s office, which repeatedly mentioned that the state agency is chronically underfunded and understaffed.

“I understand that’s the problem,” Gerst said, “but the public has a right to have an agency do what it’s supposed to do.”

Want to republish this story? See our republication guidelines.