How to Respond to a TPU Audit or Investigation

Despite controversy and court challenges, the TPU is stepping up its scrutiny of NYC landlords.

Owners most familiar with the DHCR’s Tenant Protection Unit (TPU) have probably received audit notices seeking either DHCR rent registration compliance for rent-stabilized buildings or proof of individual apartment improvements (IAIs) performed that resulted in significant rent hikes. The TPU also has initiated investigations of some owners based on allegations of harassment—that is, activity that’s designed or intended to cause tenants to give up their rights as rent-regulated tenants.

Owners most familiar with the DHCR’s Tenant Protection Unit (TPU) have probably received audit notices seeking either DHCR rent registration compliance for rent-stabilized buildings or proof of individual apartment improvements (IAIs) performed that resulted in significant rent hikes. The TPU also has initiated investigations of some owners based on allegations of harassment—that is, activity that’s designed or intended to cause tenants to give up their rights as rent-regulated tenants. Patterns of activity behind these investigations can include shutting off essential services, charging improper fees, failing to provide renewal leases, commencing frivolous litigation, requesting income or citizenship status information, or pressuring tenants to accept inadequate buyouts. Investigations by the TPU probably contributed to later enactment of a joint state/city Tenant Harassment Prevention Task Force.

TPU investigations have, in some cases, resulted in settlement agreements by which owners agree to a period of business practice review by an appointed monitor, paying fines, refunding rent overcharges, registering rents, and providing leases. In some cases, criminal prosecution has resulted after a TPU investigation doesn’t resolve the matter by settlement.

We’ll discusses the creation and history of the TPU, its audit and investigatory roles, and how to respond to TPU audits concerning rent registration, individual apartment improvements, and outstanding rent reduction orders, as well as how to respond to more far-reaching TPU investigations based on alleged landlord fraud, illegality, or harassment of tenants.

Creation of the TPU

In 2012, the New York State Division of Housing and Community Renewal (DHCR) established the TPU to prosecute certain violations of the Rent Stabilization and Rent Control Laws. New York City Rent Stabilization Code (RSC) Section 2520.5(o), added in 2014, describes the TPU as:

The Office of the Tenant Protection Unit (TPU). The office of the DHCR designated by the Commissioner to investigate and prosecute violations of the Emergency Tenant Protection Act, the Rent Stabilization Law and the City and State Rent laws. In furtherance of such designation, the TPU may invoke all authority under the ETPA, RSL, RSC and State and City rent laws and the regulations thereunder that inures to the Commissioner, DHCR or the Office of Rent Administration. However, nothing contained herein shall limit the mission and authority of the Office of Rent Administration to administer and enforce the ETPA, the RSL, and the City and State rent laws and all such regulations promulgated thereunder.

Similar provisions were added to the definitions contained in the state rent stabilization regulations, as well as state and city rent control regulations [New York State Rent and Eviction Regulations Section 2100.3(c); N.Y.C. Rent and Eviction Regulations Section 2200.2(r); and ETPA Section 2500.3(c)]. Prior to creation of the TPU, Rent Stabilization Code Section 2527.2 had long provided that the DHCR could initiate investigative proceedings when deemed necessary or appropriate under the Rent Stabilization Law or Code. Rent Stabilization Code Section 2526.4 also provides that the DHCR can administer oaths, issue subpoenas, conduct investigations, make inspections, and designate offices to hear and report. However, until 2012, use of these provisions was unusual except perhaps when the DHCR held inspections concerning building service issues or held conferences and hearings on issues concerning harassment of tenants. By setting up the TPU, the DHCR greatly expanded the scope of agency-initiated actions such as rent audits and investigations.

How the TPU Works

The DHCR provides information on TPU’s history and activities on its web page, found at The DHCR describes the TPU as having four units: (1) audit/investigatory; (2) legal; (3) forensic analysis; and (4) intergovernmental affairs. The TPU audit/investigatory unit consists of auditors, investigators, and housing inspectors who provide TPU with information concerning potential illegality, misrepresentations, and fraud by landlords. The TPU legal unit analyzes investigations for fraud, harassment, and other illegalities, in order to “proactively” prevent violations of housing laws and root out fraud. The TPU’s forensic analysis unit examines 10 years of rent information from a “data warehouse” in order to identify buildings and landlords that TPU finds warrant audits and investigation. The TPU’s intergovernmental affairs unit handles outreach to the community through communications with elected officials, landlord and tenant advocacy groups, affordable housing advocates, real estate policy groups, and other governmental agencies.

Court Denies Challenge to Creation and Operation of the TPU

In 2014, a real estate industry lawsuit challenged the creation and operation of the TPU, as well as other provisions of the 2014 Rent Stabilization Code amendments. In that case, Portofino Realty Corp. v. DHCR [Index No. 501554/2014 (Sup. Ct. Kings Co.)], owners argued that the TPU was created and was used to investigate rent increases and to issue rulings without providing due process of law or following DHCR procedures. The DHCR and tenant organizations that joined in the action asked the court to dismiss the case. The court ruled in the DHCR’s favor in a lengthy decision issued on May 31, 2017 [see NYC Landlord v. Tenant, case #27757 for a copy of the court’s decision].

In Portofino, the court found that the creation of the TPU didn’t violate the owners’ due process rights. TPU audit or investigation determinations didn’t make legally binding administrative orders or findings that could deprive owners of their legal rights. TPU audits were preliminary and, if cases were forwarded by the TPU to the Office of Rent Administration (ORA), owners were given required due process protections in any proceedings commenced by the ORA. Owners had argued that, if they failed to comply with TPU audit determinations, they lost the “safe harbor” of time to refund rent overcharges without a presumption of willful overcharge or assessment of triple damages.

But the court agreed with the DHCR’s claim that owners still would be able to take advantage of the safe harbor and avoid triple damages by cooperating with the DHCR once the case was filed with the ORA by the TPU. The TPU itself didn’t make any rulings that an overcharge was willful or recommend triple damages in connection with rent overcharge cases it referred to the ORA. For this reason, the court found that the creation of the TPU didn’t deprive owners of due process since, as it stated, “the landlord is given a fair and meaningful opportunity to present evidence on the issue of willfulness of the overcharge prior to DHCR’s final determination.” An appeal by owners of the Kings County court’s decision in the Portofino case is pending.

In any event, in any response to a TPU audit, subpoena, or court proceeding, owners should include objections to the TPU’s authority and actions generally as they may apply to the particular circumstances of the case.

TPU Rent Registration Initiative

Starting in 2012 and based on the DHCR’s finding that many rent-stabilized units previously registered were no longer registered annually, the TPU began notifying many owners who had failed since 2009 to register previously registered apartments to either register for the missing years or provide an explanation as to why the units were no longer being registered. A sample TPU Rent Registration Compliance Notice (see below) sets forth the years that TPU claims annual registrations are missing, and demands that the notified owner complete missing registrations within 30 days, using the DHCR’s Annual Rent Registration Online (ARRO) system found at

An owner who needs additional time to complete a response to a Rent Registration Compliance Notice should request in writing an extension of time to respond. Proof of delivery of any extension request or other response to the TPU concerning the Rent Registration Compliance Notice should be retained—either a date-stamped copy of a hand-delivered response, or proof of mailing to the TPU, ideally by certified mail, return receipt requested. Any extension request or response should include the owner name, building address, and TPU docket number in order to properly identify the compliance audit that you are responding to.

If the missing registrations simply have not been completed, owners who don’t already have one can request a User ID for the ARRO system at The TPU notice also points out that owners must mail copies to tenants of any missing rent registrations being filed. Owners can print out and submit a receipt from the ARRO system acknowledging the annual registration filing, and should retain proof of mailing of tenant copies. For tenant copies of annual registrations, certificates of mailing are sufficient proof of mailing.

If an owner must file initial rent registrations, these are not done through the ARRO system. Owners should retain hard copies of the initial registration forms along with proof of delivery of the registrations to the DHCR, again with either a date-stamped copy of a hand delivery or certified mail receipt, with return receipt requested. Note that, unlike tenant copies of annual rent registrations, tenant copies of initial registrations require proof of mailing through certified mail.

Once missing registrations are completed and proof submitted to the TPU, owners should expect a determination from the TPU closing out the rent registration compliance matter. If no such determination is issued by the DHCR, submit a follow-up response requesting a determination that confirms that the requested registrations were completed. Include copies of what was previously submitted, with proof of mailing or hand delivery.

Responding to a TPU Rent Registration Compliance Notice can be more complicated if the owner either has no rent history documentation for the year(s) in question, or disputes that a building or apartment is subject to rent stabilization. Some apartments may have become deregulated as the result of high-rent vacancies, in which case an “exit registration” needs to be filed to list the apartment as permanently exempt (PE) during the year that the high-rent vacancy took place. An apartment registered during one year as PE does not continue to be registered in subsequent years.

An owner may dispute that rent registration is needed for various reasons, but will need to explain those reasons. Reasons that rent registration may no longer apply can include expiration of tax benefits that were the sole reason that apartments were rent stabilized, or substantial rehabilitation of a building that exempts the building from rent regulation.

If an owner does not provide requested registrations in response to a TPU audit notice, the TPU may refer the matter to the ORA by commencing a rent overcharge complaint against the owner for any unregistered unit. The owner will then have to either register the apartment or convince ORA that no registration is required. And, while tenants may not have received notification from the TPU of the rent registration audit proceeding, ORA will notify an apartment’s tenant of the rent overcharge complaint and give the tenant a chance to respond. If ORA determines that an apartment is rent stabilized and should have been registered, the apartment’s rent can be frozen at the amount of the last registered rent until the apartment’s later rents are registered.

Unlike ORA decisions, there is no procedure available for an owner to file a petition for administrative review (PAR) of a TPU rent registration audit determination. However, as discussed below, an owner can request reconsideration.

TPU Individual Apartment Improvement Audits

In recent years, DHCR annual rent registration forms include an item requesting information on individual apartment improvements (IAIs), including the amount of a rent increase collected since the last annual registration that’s based on an IAI. In addition to reviewing DHCR rent registration data in search of missing registrations, TPU analysts review rent registration data for significant rent increases based on IAIs. Following these reviews, the TPU has then sent some owners a letter (see sample letter below), identifying a particular apartment and notifying the owner that between two listed years, “rent registration information on record with HCR indicates that there has been a significant increase in the reported legal regulated rent for the apartment listed above. Because of this increase, the TPU has chosen to conduct an audit for the unit note above.” A typical IAI Audit Notice letter covers one apartment, although an owner may receive more than one notice, each concerning a different apartment.

A TPU IAI Audit Notice will request copies of “all supporting documents that justify the legal regulated rent,” including leases, bills, cancelled checks, receipts, contracts, and invoices from contractors. The IAI Audit Notice also will ask for the date any work was completed and the calculation of the new legal rent over the prior rent. If the requested documentation isn’t available, the IAI Audit Notice asks for submission of an Owner’s Affidavit containing:

  • A detailed explanation of the work performed;
  • The installation dates of the work;
  • The identity of the contractors and any subcontractors; and
  • A breakdown of the cost of the work.

The IAI Audit Notice demands a response within 30 days. As with other TPU or DHCR notices, discussed above, if more time is needed, owners should request an extension in writing and maintain proof of delivery of any such request.

Responses to IAI Audit Notices should be specific and as detailed as possible. Owners should submit a cover letter or statement outlining the contents of any documents submitted. If the TPU isn’t satisfied with an owner’s response to an IAI Audit Notice, it may send a follow-up notice requesting additional information. DHCR Operational Bulletin 2016-1, found at, shows that the DHCR now generally requires more specific IAI documentation than previously required under DHCR Policy Statement 90-10, and provides specific information on what types of information DHCR seeks to identify IAIs. After completing a review of all information submitted by an owner, the TPU issues a Notice of Audit Determination (see sample notice below). This determination notice shows whether the TPU has accepted or rejected all or part of an owner’s submitted IAI documentation and includes an “IAI Investigation Worksheet” to explain the TPU’s decision. The TPU Audit Determination may reset an apartment’s rent and direct a refund or credit to a current tenant. The TPU Audit Determination will give an owner 30 days to comply with its directives and provides an Affidavit Form for submission to the TPU.

Again, there is no procedure available for an owner to file a “PAR” of a TPU IAI Audit determination. However, as discussed below, an owner can request reconsideration.

An owner who disputes the TPU’s determination of an IAI Audit and does not comply with the TPU’s directives to reset rent and refund overcharges, will have the chance to reargue its position before the ORA when the TPU commences an overcharge complaint with the ORA based on the owner’s noncompliance with the IAI Audit Determination. As the court indicated in the Portofino decision, discussed above, the ORA doesn’t always agree with the TPU’s determination, and owners may receive different results after ORA review.

For example, in Matter of Warmflash/Bennet [DHCR Adm. Rev. Docket No. ES-210051-RT (3/16/17), LvT #27700], the TPU approved only $18,240 of an owner’s claimed $28,300 spent on IAIs. The TPU referred a rent overcharge complaint to the ORA after the owner failed to comply with the TPU’s directive to reduce the tenant’s rent and refund an overcharge. The Rent Administrator (RA) found no overcharge and the DHCR dismissed the tenant’s PAR of that decision. The TPU had disallowed certain renovation costs because it didn’t receive a breakdown from the owner. But the owner submitted the breakdown in response to the RA’s request.

An owner who disagrees with a TPU Audit Determination may not always get a better result from the ORA. In Matter of PACST 1244-46, 1356 LLC [DHCR Adm. Rev. Docket No. DP-210024-RO (7/8/15), LvT #26505], the TPU filed an overcharge complaint with the ORA after the owner disputed IAI Audit findings. The owner’s IAI documentation had been destroyed in a fire, but the TPU approved some IAI increases after conducting an apartment inspection and reduced the rent to $773. The ORA, on the other hand, applied a default formula, reduced the legal rent to $663, and ordered a $12,000 refund with interest.

In Matter of Flanagan [DHCR Adm. Rev. Docket No. EW-210059-RO (5/25/17)], an owner failed to comply with the TPU’s default determination on an IAI Audit. The owner argued that the TPU had no standing to rule on the apartment’s legal rent. The ORA disagreed, stating that Rent Stabilization Law Section 26-516 permitted the DHCR to initiate a proceeding, and Rent Stabilization Code Sections 2520.4 and 2520.5 permitted the DHCR to delegate authority to the TPU.

TPU Rent Reduction Audits

Another, less frequently seen, type of TPU audit concerns rent reductions that result from DHCR decisions finding that there has been a reduction in services and reducing tenants’ rents to the level in effect before the most recent guidelines increase until the DHCR approves an owner’s application to restore rents based on restoration of services. In Cintron v. Calogero [99 A.D.3d 456 (2012)], New York’s highest court ruled in 2012 that, if a tenant complains of a rent overcharge, a court or the DHCR could look back more than four years to determine if a rent reduction was still in effect and enforce the rent freeze during the four-year look-back period applicable to the overcharge complaint.

The TPU in some instances, based on review of outstanding DHCR rent reduction orders and annual rent registrations that didn’t indicate that a reduced rent was being charged while the legal regulated rent was higher, has initiated audits that question whether the reduced rent was being paid in accordance with the still effective rent reduction order. As with other TPU audit determinations, the TPU will refer the matter to the ORA to proceed with a complaint on behalf of the tenant if the owner’s response is not satisfactory.

Can a TPU Audit Determination Be Appealed?

Unlike rulings issued by the ORA on complaints or applications, a TPU determination is not subject to appeal by filing a “PAR” within 35 days of the audit determination. However, an owner may attempt to obtain a modified determination by filing a request for reconsideration with the TPU and, if filing this request, should do so within the 30-day period for compliance set forth in the TPU Audit Determination Notice. In any event, assuming the matter is referred to the ORA, the owner will have a new opportunity to answer the claim, and can file a PAR of any RA decision within 35 days.

TPU Investigations

TPU investigations are more complicated than rent registration or IAI audits. Some of these investigations have resulted in settlement agreements between owners and the DHCR, the New York State Attorney General, and/or local District Attorneys’ offices. Such settlements may include a period of monitoring as well as payment of fines. Other investigations have led to criminal prosecution or civil lawsuits. Investigations conducted to date by the TPU that have resulted in settlements or prosecution are summarized under “TPU Timeline,” on the DHCR’s website at

For example, in one case, a TPU investigation led to the Brooklyn DA’s prosecution of owners for extreme harassment and intimidation of tenants in 10 buildings where it was found that apartments were made uninhabitable. In another case, the TPU and the AG accused owners and their managing agent of starting sham legal proceedings against tenants and coercing tenants to sign away their rights to rent-stabilized apartments. After the owners and the TPU were unable to reach a settlement, the AG sued the owners and their agent in a pending civil court action.

An owner is likely to learn of a TPU investigation through the issuance of subpoenas seeking wide-ranging submission of documents. At the same time, a press release probably will appear on the DHCR’s website and elsewhere. TPU subpoenas may seek owner and management documents concerning:

  • Management structure;
  • Business plans and management strategies;
  • Rent increases;
  • Rent registrations;
  • Policies and procedures concerning building acquisition, maintenance, repair, rent calculations, rent subsidies, renovations, tenant access, nonpayment proceedings, and nonprimary residence holdover proceedings;
  • Tenant complaints; and
  • Disciplinary actions against employees.

An owner should not ignore any subpoena received from the TPU and, in light of potential monetary damages or criminal prosecution, should probably consult with an attorney when responding.

An owner may also wish to attempt access to records maintained by the TPU in connection with any publicly announced investigation by filing a Freedom of Information Law (FOIL) request with the DHCR. In response, the TPU will probably claim that much information it has compiled is exempt from disclosure under the law enforcement exemption, or other exemptions, listed in the New York Public Officers Law governing FOIL requests. If the TPU denies a FOIL request, and an appeal of the TPU’s decision to the DHCR’s counsel is also denied, an owner who wishes to pursue such a request will have to commence an Article 78 court proceeding for judicial review of the DHCR’s decision. While the TPU may produce some additional documentation in response, this can be a time-consuming process and success may be limited. Even with those considerations, there may be good reasons to pursue the FOIL request, and an owner should probably consult with an attorney before proceeding.

Tenant Harassment Prevention Taskforce

The TPU is not the only governmental agency unit that may initiate investigations of tenant harassment claims. Citing an increase in tenant complaints since the creation of the TPU in 2012, the governor, the AG, and the NYC mayor announced in 2015 the creation of a joint Tenant Harassment Prevention Task Force (THPT) to investigate and bring enforcement actions, including criminal charges, against owners who harass tenants by creating unsafe living conditions through illegal construction. The THPT is a collaboration of the Office of the NY State Attorney General, DHCR, NYC Department of Housing Preservation and Development (HPD), NYC Department of Buildings, NYC Department of Health & Mental Hygiene, and the NYC Law Department, among others. The THPT aims to coordinate city and state agencies for joint inspections, enforcement actions, and litigation to prevent tenants from being forced out of apartments. Tenants can file complaints directly with THPT.

In one 2017 case, the THPT reached a settlement agreement with an owner of buildings in the East Village, Lower East Side, and Brooklyn. The owner signed an Assurance of Discontinuance (AOD) with the AG, which required the owner to adopt policies and procedures to prevent future violations and safety risks, correct all outstanding violations, establish safety construction procedures, and provide rent abatements to tenants during disruptions of essential services. The AOD also appointed a tenant liaison and a monitor to ensure compliance with the AOD, and called for the owner to pay $300,000 to New York State on behalf of THPT, and $200,000 to HPD in penalties, fees, and costs.


About the Author

Eileen O’Toole, Esq. is a partner with the New York City law firm of Borah, Goldstein, Altschuler, Nahins & Goidel, P.C., whose law practice concentrates on landlord-tenant matters. A frequent writer and lecturer on rent regulation and other real estate topics, she is also the Contributing Editor of New York Landlord v. Tenant, the Insider’s monthly legal decision service.

Ms. O’Toole is also editor of the annual NYC Apartment Management Checklist, a one-stop resource for complying with the many laws and regulations affecting New York City apartment buildings. For information about the 2018 edition, please click here.


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Sample TPU Notices