7 On Your Side Investigates: Single mom questions legality of 300 percent rent hike

WASHINGTON HEIGHTS, Manhattan (WABC) -- A single mother of two children is fighting an eviction from the Manhattan apartment where she has spent roughly the last eight years.

Lucy, who didn't want her last name used, hugged her 3- and 4-year-old daughters as they ate lollipops on a bright pink bed meant for toddlers inside the modest Washington Heights apartment.

"Do you want to stay here?" she asked her girls.

"Yes!" They replied.

"I love you," she said.

It's the only home her kids have ever known.

"It's scary," Lucy said. "I don't want to end up homeless. I don't want to put my kids in a situation where we don't have a place to live."

Lucy said the landlord served her an eviction notice without explanation and declined to offer a lease renewal when Lucy's lease expired, even though she had been a good tenant who paid her rent on time.

A letter from the apartment management company confirmed Lucy had been a responsible tenant.

"There is no reason for her to do this," Lucy said. "You can always go to a different apartment, but it's important to have stability for my kids. I could probably get another apartment and live there for a year, and then in a year we're going to need to go to another place, and I don't want that for my kids."

After choosing to stay and fight the eviction, Lucy reached out to an attorney at the Legal Aid Society who encouraged her to obtain the apartment's rental history from New York state.

The document revealed Lucy's landlord had hiked the rent in her unit by roughly 300% a couple years before Lucy moved in, increasing it from just over $600 to just over $2,000 a month and causing the apartment to no longer qualify as a rent stabilized unit in the state, subject to extra tenant protections for people like Lucy -- such as lease renewal offers.

"This is a way for landlords to quickly increase the rent beyond the normal percentages allowed by the rent guidelines board," Lucy's attorney, Jeremiah Schlotman, said.

Schlotman believes Lucy is the victim of a New York state law intended to incentivize apartment improvements by allowing landlords to pass a small portion of those improvements down to tenants through permanent rent increases.

When the improvements occur during a vacancy, the landlord does not need to ask permission to make the improvements or increase the rent.

Additionally, the state's housing regulators typically don't verify whether the alleged improvements occurred or if the rent increases were truly justified by the work.

Lucy said her apartment showed no signs of interior improvements when she moved in and questioned whether any work had actually occurred.

When Schlotman questioned the sudden rent increase in housing court, the landlord filed court documents arguing Schlotman's complaint shouldn't be considered because it had surpassed a "four-year look back period" allowed by the law.

A judge disagreed and allowed the case to continue, and in subsequent court documents, the landlord admitted it couldn't produce any receipts related to the roughly $45,000 management had allegedly spent improving Lucy's place.

"That is the sort of thing we are seeing," Schlotman said. "That is not uncommon."

Schlotman said he believes many landlords inflate the cost of improvements and sometimes entirely make up the existence of apartment improvements in order to raise the rent.

New York state admits there's a problem.

To increase compliance, Governor Andrew Cuomo created a Tenant Protection Unit to randomly audit landlords for fraud. That unit has returned over $5 million in overcharges to tenants since its creation about seven years ago, but tenant advocates like Schlotman say the Protection Unit only catches a fraction of landlords abusing the law while allowing others to continue unchecked.

In the past five years, New York City alone has lost over 27,000 rent stabilized apartments because of rent increases allowed under state law, according to a New York City housing report.

"In my mind, the solution is to eliminate the individual apartment loophole," Schlotman said.

Some lawmakers agree. They are proposing eliminating the Individual Apartment Improvement law when the state's rent regulation laws expire later this week.

"Individual Apartment Improvements (IAIs) are fraught with fraud and fundamentally designed and used to drive displacement," said Brooklyn Assembly Member Diana Richardson, who's proposed a bill to eliminate IAIs. "It's the legalization of fraud, and the victims are the most vulnerable and low-income tenants, like Lucy, a tenant in Washington Heights, and thousands of others across the state."

The state agency reasonable for protecting affordable housing also supports reforming the law.

"The governor is fully committed to working with the legislature and tenant community to reform rent regulations, including ending vacancy decontrol, repealing preferential rent and limiting capital building improvement charges to protect affordable housing and respect tenants' rights," said a spokesperson with the state agency responsible for regulations, New York State Homes and Community Renewal.

A judge has yet to rule in Lucy's case, and when Eyewitness News repeatedly reached out to the landlord for comment outside of what was available in court records, the landlord never responded despite multiple attempts to connect by phone and email.

"What she has done, it's not right," Lucy said.

Lucy hopes the judge will allow her to stay in her apartment so that she can provide stability for her kids.

She also hopes that when New York's housing regulation laws expire later this week, lawmakers will pass reforms to better protect tenants like herself from eviction.

"I don't want anybody in this situation," Lucy said. "Not even my worst enemy."

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