Following trial in this summary nonpayment proceeding the court sets forth below

its findings of fact and conclusions of law.

Petitioner commenced this summary nonpayment proceeding to recover rent arrears for the subject premises located at 1097 Walton Avenue, Apartment #36, Bronx, New York. Petitioner alleges that respondents failed to make monthly rent payments totaling $1,345.95 through May 2007. Respondents Elenor and Alberto Ballesteros allege that they have been overcharged by the landlord and have interposed counterclaims for rent overcharges and a rent abatement.

On its direct case, Petitioner called Joseph Freedman, one of the members of 1097 Holding LLC. Petitioner established that 1097 Holding LLC is the owner of the subject building located at 1097 Walton Avenue, Bronx, New York and that respondents are the rent-stabilized tenants of Apartment #36 (hereinafter the "subject premises") pursuant to a two-year written lease effective October 1, 2005. (Petitioner's Exhibit 3.) The monthly rent reflected in

the lease is $925.00. This is also the rental amount registered with the Department of Housing and Community Renewal ("DHCR") as reflected in the DHCR report. (Petitioner's Exhibit 4.) Mr. Freedman testified that the last payment made by respondents was $212.25 on April 30, 2007 and that the amount owed through May 2007 is $1,345.95.

Respondents testified on their own behalf and called as a witness a former tenant of the subject premises, Amanda Cruz. Ms. Cruz testified that she lived at 1097 Walton Avenue, Apartment #36, from July 1, 1997 until she moved into her current residence at the end of October 2004. She testified that when she left the subject premises in October 2004, her rent was $616.46. Ms. Cruz acknowledged that she vacated her apartment prior to the expiration of her lease.

Respondents maintain that since the DHCR report (Petitioner's Exhibit 4) reflects that the last registered rent for Ms. Cruz was $573.46 for a two-year lease term ending June 30, 2004, the [*2]next legal rent for Apartment #36 cannot be more than that amount plus the vacancy increase.

Petitioner called as a rebuttal witness property manager Sol Singer. Mr. Singer testified that the last legal rent for Ms. Amanda Cruz was $616.46, based on a lease renewal that she signed, and that Ms. Cruz vacated the apartment in July 2004, before her lease ended. Admitted into evidence as petitioner's Exhibit 9 is an undated internal printout showing that Ms. Cruz paid $616.46 for July 2004 rent on July 13, 2004. A signed lease renewal reflecting the $616.46 rent for Ms. Cruz however was never entered into evidence. The rental amount of $616.46 also was never registered by petitioner as reflected in the DHCR report (Petitioner's Exhibit 4.) Mr. Singer further testified that another tenant, Pilgrim Realty, moved in and occupied the subject apartment from September 2004 until August 2005, at a monthly rental rate of $795.00. Admitted into evidence as Petitioner's Exhibit 7 was another internal computer printout dated May 10, 2007, showing charges to and payments by Pilgrim Realty in the amount of $795.00 per month for the period of August 2004 through August 2005. The DHCR report (Petitioner's Exhibit 4) however shows Pilgrim Realty as a tenant from September 1, 2004 until August 31, 2006, with a monthly rent of $795.00.

Mr. Singer additionally testified that before Pilgrim Realty moved in, extensive improvements were required to be made to the subject apartment, as Pilgrim had a contract with the city to provide housing. Mr. Singer testified that the following improvements were made to Apartment #36 before Pilgrim Realty moved in: walls were ripped down and replaced, and new equipment was installed (new pipes, new parquet floors, new appliances, new tub). Mr. Singer also testified that he observed the work being done throughout August 2004 and the first week of September 2004. Mr. Singer testified that it was because of this work that the rent was increased by 1/40th of the cost of renovations, and that it was further increased by 20 percent after Ms. Cruz vacated the premises, bringing the rent for Pilgrim Realty to $795.00. Admitted into evidence were two checks totaling $7,528.94, (Petitioner's Exhibits 10A & B), which Mr. Singer testified were paid upon completion of those repairs. Petitioner's Exhibit 10A to "Genco Construction" is dated September 7, 2004 in the amount of $4,000.00, and Petitioner's Exhibit 10B to "Feldman Lumber" is dated September 22, 2004 in the amount of $3,528.94. Neither check however has any indicia tying the payments for work performed in Apartment #36 or even that such payments were paid for work performed in the subject building.

The Rent Stabilization Law of 1969 permits a 20 percent increase in the legal regulated rent when a vacancy lease is for two years. New York City Administrative Code (NYC Admin. Code) §26-511 (c)(5-a)(i). It is undisputed that Ms. Cruz vacated Apartment #36 in either July or October 2004, and that the landlord would be entitled to a 20 percent increase on the next two-year vacancy lease. Although petitioner maintains that the legal regulated rent for Ms. Cruz prior to her vacancy was $616.46 based on her last lease renewal, the lease renewal was not admitted into evidence, nor was the $616.46 rent ever registered with the DHCR. As the last legal registered rent for Ms. Cruz was $573.46, the 20 percent vacancy allowance would permit petitioner to raise the rent for the next tenant to $688.15.

Petitioner maintains that it is entitled to an additional increase for improvements performed in Apartment #36 before Pilgrim Realty took possession. The Rent Stabilization Law provides that "an owner is entitled to a rent increase where there has been a substantial modification or increase of dwelling space or an increase in the services, or installation of new [*3]equipment or improvements. . . ." NYC Admin. Code §26-511(c)(13). It further provides that, "[t]he permanent increase in the legal regulated rent for the affected housing accommodation shall be one-fortieth of the total cost incurred by the landlord in providing such modification . . . services, furniture, furnishings or equipment. . . ." Id. When the improvements are made during a vacancy, tenant consent is not required. Id.

However, in an action in which a tenant challenges a rent increase due to alleged improvements to the apartment, the landlord has the burden of putting forth sufficient documentation of the expenditures made. 985 Fifth Ave. Inc. v. State Div. of Housing & Community Renewal, 171 AD2d 572 (1st Dept 1991). In the case before the court, the only evidence submitted by petitioner in support of the 1/40th rent increase for improvements were the two checks, Petitioner's Exhibits 10A and 10B, which purportedly represent payment for the work performed in Apartment #36. However, neither check specifies that it is in payment for improvements to Apartment #36 and petitioner presented no other evidence that improvements were actually performed in the subject apartment to justify a rent increase. Petitioner has not met its burden, and the improvement increase is disallowed.

As for the second alleged vacancy increase, petitioner claims that an entity by the name of "Pilgrim Realty" occupied Apartment #36 from August 2004 to August 2005, and presents an internal "snapshot" as well as the DHCR records in support of this claim. However, the internal snapshot was generated on May 10, 2007, and there was no other evidence or testimony offered to support the existence of a lease between Petitioner and Pilgrim from August 2004 until August 2005. As for the DHCR records, they do not provide sufficient additional proof, as those reports are based on information reported by the landlord and there is no indication that the information is verified by the DHCR. Further, Ms. Cruz, who is a disinterested witness, credibly testified that she did not move out of the subject premises until the end of October 2004, which would make it impossible for Pilgrim Realty to have moved into Apartment #36 in August or September 2004 as alleged by petitioner. Again, petitioner has not met its burden of proving that there was a legal tenant in Apartment #36 after Ms. Cruz vacated, and the second increase based on a vacancy is disallowed.

With respect to respondents' counterclaim for an abatement due to the breach of the warranty of habitability, Ms. Cruz testified as to the following conditions in Apartment #36 when she lived there: no bathroom ceiling, hole in bathroom floor, mold on the bathroom walls, broken bedroom window, hole in the kitchen ceiling due to leaks, hole behind the sink and stove where rats enter the apartment, infestation of roaches, broken mailbox, and constant leaks from the ceiling.

Elenor and Alberto Ballesteros testified as to the present conditions in Apartment #36 as follows. In December 2005, approximately three months after moving in, water began leaking from the kitchen ceiling, kitchen sink and bathroom ceiling. Respondents testified that they notified petitioner of the conditions but did not receive a response. It was not until January 2006, after respondents called 311, that the superintendent came to their apartment, at which time he painted over the holes in the ceiling. There were approximately six holes in the ceiling and the leaks occurred at least three times per week. On the same day that the ceiling was painted, the leak in the kitchen reoccurred and again 311 was called. Two to three days later, the bathroom ceiling leak reoccurred, and the lights stopped working due to the accumulation of water in the fixtures. Two months later, the landlord sent a person to repaint the ceiling but the [*4]leaks continued. Respondents testified that the leaks are so severe that the family must carry umbrellas in the apartment, and the stove must be moved away from the leaks in order to cook. They cannot shower because of the dirty water leaking from the bathroom ceiling.

Respondents testified that in addition to the leaks in their apartment, there is black mold around the holes where water has leaked down the side of their cabinets and inside the sink in the kitchen and there have been rats, mice and roaches constantly throughout the apartment since December 2005. Respondents testified that they hear rats "cracking and biting," so loudly that they initially thought someone was trying to break into their apartment and called the police. The police arrived, pulled the stove from the wall and discovered rats hiding behind the wall. Respondents testified that they informed the petitioner of the rats but an exterminator never was sent.

Admitted into evidence were respondents' Exhibits A through G, which are photographs purporting to show some of the conditions in the apartment, and Exhibit H, a printout of HPD violations for Apartment #36. The court notes that there are three "class B" violations, two for the bathroom ceiling, reported in March 2007 (one to properly plaster and one to repair the broken light fixture), and one violation reported in May 2007 for "vermin mice in the entire apartment."

On rebuttal, petitioner called Lissette Lora, who has lived in Apartment #46, the apartment above the respondents since December 9, 2006. Ms. Lora testified that her washing machine has overflowed two or three times and that she has been told by the landlord to remove the washer. She also testified that the exterminator comes to the building on the first

Monday of every month, but that she has seen 10 to 20 mice in her apartment since moving in. She also has roaches.

Petitioner's second rebuttal witness, Sol Singer, after reviewing the parties' stipulation dated November 6, 2006 setting forth access dates of November 16 and 17, 2006, testified that he had not been notified of any leaks in respondents' apartment prior to the parties' agreement of November 6, 2006. He further testified that no one answered the door when his workers went to the subject apartment on November 16, and that on November 17, respondents showed him a brown spot over the bathtub that was not wet, a brown spot in the kitchen, and that his workers plastered the ceiling. He testified that respondents also wanted him to replace a light bulb, which he said he would not do, and he does not recall if there was a leak under the kitchen sink or not. Mr. Singer stated that respondents never notified him about rodents in their apartment, and that an exterminator is present in the building on the first Monday of every month and knocks on every door of the building.

Addressing respondents' counterclaim for an abatement due to conditions in the apartment, respondents credibly testified as to multiple ongoing leaks, rats, mice and roaches and notification of these conditions to the petitioner or petitioner's agent. Respondents specifically testified as to the superintendent's attempt to repair and the reoccurrence of the conditions shortly thereafter. Additionally, petitioner's own witness, Ms. Lora, testified that she has had multiple mice in her apartment, as well as roaches, in the short time she has lived there (since December 2006) despite being aware of the extermination schedule. In view of the evidence presented, respondents are awarded a 25% abatement from January 2006 until May 2007, when the repairs were completed.

Based on the foregoing, petitioner has failed to prove an essential element of its prima [*5]facie case in this nonpayment proceeding insofar as the legal regulated rent has not been established. The petition therefore is dismissed.

Based on the evidence and testimony presented at trial, respondents have successfully proven their counterclaims of rent overcharge and an abatement. The court finds the legal regulated rent for Apartment #36 to be $576.43 for the period ending October 2004 when the prior tenant, Ms. Cruz, vacated the subject premises. Petitioner therefore is entitled to claim a vacancy increase at a rate of 20% ($576.43 x 20% = $114.62) for a total rental rate of $688.15. Petitioner's claim for a second vacancy increase and an individual apartment increase is disallowed based on a failure of proof as set forth above. Respondents therefore are entitled to a credit of $236.85 per month ($925.00 - $688.15 = $236.85) from the commencement of their tenancy in September 2005. Additionally, respondents have proven by a preponderance of the credible evidence the existence of rent-impairing conditions in the subject premises of which the petitioner had notice for the period January 2006 through May 2007. Respondents are awarded a 25% rent abatement.

The parties are directed to appear on October 5, 2007 at 9:30 a.m. in Part S, 10th floor, for hearing on the issues of treble damages, interest and legal fees and other appropriate relief.

This is the decision and order of the court.

Dated: Bronx, New York________________________________________

September 13, 2007Lydia C. Lai, J.H.C.