I just received a notice in the mail that my building has undergone a Major Capital Improvement for an elevator repair. Does this mean the landlord can permanently raise my monthly rent? How is the rent increase calculated? Should the tenants in our building consider hiring a lawyer?
If all the tenants in your building are wondering about these new MCI charges, then yes, you and your neighbors should at least consult with a lawyer, says Sam Himmelstein, a lawyer who represents residential and commercial tenants and tenant associations.
Ultimately, it may not make sense to take on legal representation, depending on the size of the MCI and how many other tenants you'll be splitting the bill with. However, David Hershey-Webb, a partner at HMGDJ law who represents tenants battling capital improvement-related rent increases, points out that many firms (including theirs) will sit down with tenant associations for a free consultation.
“At the very least, no matter what the MCI is, it would make sense to sit down with an attorney for an initial consultation," he says. "Based on that, you can determine whether you have the means and whether it's worthwhile to fight the MCI."
Also note that there have been changes recently to the laws on MCIs, which are major upgrades made to buildings, such as the installation of a new boiler or roof.
“Thanks to the tireless efforts of tenant advocates, under the Housing Stability and Tenant Protect Act of 2019 (HSTPA), enacted in June 2019, there were a number of changes to the MCI laws that benefit tenants,” says Hershey-Webb.
In the past, landlords have been able to institute permanent rent increases, calculated based on the cost of these upgrades. Now, thanks to the new legislation, MCI rent increases are phased in at 2 percent a month for both rent stabilized and rent controlled tenants (before, it was 6 percent and 15 percent, respectively). This applies, going forward, to any MCI rent increase that was granted on June 16, 2012 or later.
The MCI increases also must be “reasonable,” and are taken off tenants’ monthly rent after 30 years. Furthermore, the law forbids the collection of any “retroactive” rent increases (that is, increases for the time between the filing of the MCI application and its being granted).
MCI increases cannot be charged at all to tenants in certain situations. This includes buildings with 35 percent or fewer rent regulated apartments, as well as buildings where there is a “C” (“immediately hazardous”) or “B” (“hazardous”) housing or building code violation pending.
If you do decide to push back, it's worth your while to have a lawyer on hand.
"You're going to want an attorney that has a lot of experience with Major Capital Improvements, because it's a very specialized area of the law," says Hershey-Webb.
Especially given all the recent changes to the laws for MCIs, it’s helpful to consult with an attorney who can help you make the best possible case for yourself and your neighbors.
"Tenants frequently make the wrong argument [without a lawyer]," says Himmelstein. "They'll say 'This isn't fair because this thing really needed to be repaired anyway,' but the whole point of MCIs is to encourage landlords to fix or replace systems that are in disrepair."
Instead, an attorney can help you look into whether the landlord filed their paperwork correctly, and if the work truly qualifies as an MCI.
"The code is very specific about capital improvements," Himmelstein notes. "I remember one [elevator repair] where they replaced the cab, lights, and buttons, but not the motor, and it got denied completely because it didn’t qualify."
One thing to keep in mind: To check the quality of the upgrades your landlord made, you and your fellow tenants will likely need to hire an engineer to inspect the elevators in question.
Keep in mind that the notice you received is one of the very early stages of what's always a long, drawn-out process.
"The notice just means the landlord has applied," says Hershey-Webb. "You building's owner can't collect anything until the DHCR reaches a decision, and in a lot of cases, the agency will reduce the amount the owner is seeking. Sometimes they do it on their own, and sometimes they do it if you respond and a lawyer points it out."
Generally, it is better to respond to increase the likelihood of defeating or reducing the rent increase.
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Sam Himmelstein, Esq. represents NYC tenants and tenant associations in disputes over evictions, rent increases, rental conversions, rent stabilization law, lease buyouts, and many other issues. He is a partner at Himmelstein, McConnell, Gribben, Donoghue & Joseph in Manhattan. To submit a question for this column, click here. To ask about a legal consultation, email Sam or call (212) 349-3000.