Individual Apartment Improvements (IAIs) and the New Regulations

Owners need to be aware that there are new standards of proof regarding work done on individual apartments that would substantiate a rent increase. Considering that not properly substantiated increases could be deemed overcharges — for which treble damages could be assessed — it is important to take extra care.

Forms of Proof

1. Cancelled checks (front and back) or proof of electronic payment that are contemporaneous with the work;
2. Invoice receipt marked paid in full contemporaneous with the work;
3. Signed contract agreement; and
4. Contractor’s affidavit indicating the work was completed and paid in full.

Take note that all four forms of proof may be required to substantiate IAI work. This differs from the previous policy statement (90-10) which called for any one of the above forms of proof. The new policy contained within Operational Bulletin 2016-1 states: “an owner should submit as many of the four listed forms of proof as the owner is able to provide…”

Owners should also take note that lump sum costs, i.e., coordinated projects, may be disallowed especially if there is no itemization that could prove both the location and that the work was an improvement rather than work that would be categorized as maintenance.

Work that is considered IAI-eligible (and not disallowed maintenance) include:

  • Complete bathroom modernization or renovation, including fixtures installed as part of such project, and all painting and plastering if part of such modernization or renovation
  • Complete kitchen modernization or renovation, including fixtures and appliances installed as part of such project
  • New air conditioner purchased and installed by the owner, including wirinig and outlet for the air conditioner where none previously existed
  • New washing machine
  • New parquet flooring where none previously existed
  • New subflooring
  • New flooring, including linoleum and vinyl tiles, when a new subflooring is installed
  • New carpeting
  • New built-in clothing closet
  • New furniture
  • New lighting fixtures where none previously existed
  • New storm door
  • New storm windows
  • New windows if not part of a building-wide installation
  • New full length screens where none previously existed
  • Balcony enclosure
  • Security alarm
  • New dropped and/or soundproof ceilings
  • Painting and plastering if part of a major renovation
  • Installation of sheetrock if done throughout the apartment

It should be further noted that even the above specified IAI-eligible items could be disqualified if done prior to the end of an existing improvement’s useful life.

Complete regulations, including special care when the work being done is performed by any party with whom the owner may have an affiliation, record retention and cash payment rules, can be found in Operational Bulleting 2016-1 by clicking here.

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