What should happen when an owner performs a building-wide Major Capital Improvement (MCI), but some apartments do not benefit from the work due to poor workmanship? Thus, for an example, an owner may install new windows in every apartment, but the windows may have been improperly installed in a handful of units.
In the recent case of Terrace Court, LLC v. New York State Div. of Hous. & Comm. Renewal, 79 A.D.3d 630, 914 N.Y.S.2d 43 (1st Dept. 2010), a majority of the Appellate Division, First Department held that the owner should be permanently denied MCI rent increases for the apartments that did not benefit from the work. The dissent held that the rent increases should merely be deferred until the necessary corrective work is performed.
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