In the past year, landlords of rent stabilized units have been encountering a new “pro-active” arm of the Department of Housing and Community Renewal (“DHCR”). Calling itself the Tenant Protection Unit (“TPU”), this group has been actively auditing landlords that have increased rents between tenants after performing a renovation in a given unit. The TPU is unique in that it takes the initiative without a tenant complaint and was not authorized by the legislature of New York.

In most investigations, the TPU requests proof of renovation and doesn’t actually visit the unit. Additionally, the TPU does not adhere to the classic DHCR guidelines with regards to what constitutes admissible evidence in proving that renovation work was actually done. As a result, landlords have no way to prepare for or know what is expected of them when the TPU begins an investigation. These inconsistencies are compounded by the fact that the TPU methods are inconsistent and contrary to established caselaw. In the end, many landlords are faced with a large fine in addition to being forbidden by DHCR from increasing the rent. Thus, landlords are left with nothing to show for a newly renovated unit and the steep construction costs that were sunk into it in the hope that the unit’s rental value would increase.

Landlords with rent stabilized units that are considering renovations between tenants should contact an attorney familiar with these matters for consultation purposes. It isn’t necessary to wait until an investigation begins to involve an attorney and in many cases having an attorney involved earlier may prevent an investigation or lead to a more favorable outcome. Landlords facing an investigation should retain an attorney and be prepared to battle the action within the DHCR and ultimately to the Supreme Court by way of an Article 78 proceeding.

At Paschalidis Law Offices, landlords can receive consulting to best prepare for and avoid a TPU audit as well as competent counsel to deal with the process in appealing a fine.