Docket Number: AH 410009-RO
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          APPEAL OF                              DOCKET NO.: AH 410009-RO 
                                                 DOCKET NOS.: L-3110637-R, 
                            OWNER-PETITIONER                   CDR 19,868
          ----------------------------------X    Tenant: Phillip Block  


          On or about August 22, 1986, the above-named  petitioner  filed  a
          Petition for Administrative Review against an order issued on July 
          29, 1986 by the Rent Administrator, 10 Columbus Circle, New  York,
          New York concerning the housing accommodation known  as  245  East
          30th Street, New York, New York,  Apartment  No.  62  wherein  the
          Administrator  established  the  lawful  stabilization  rent   and
          directed the owner to roll back the rent and to refund overcharges 
          of $4,802.78 inclusive of excess security and  treble  damages  on
          the overcharge occurring on or after April 1, 1984.

          When the owner's petition was reached in chronological  order  for
          active consideration the  relevant  file  could  not  be  located.
          Although efforts  were  made  to  locate  the  record,  it  became
          necessary to reconstruct the record.  Notices, which provided  the
          opportunity to submit copies of all documents previously submitted 
          or received, were sent to both the owner and the tenant on  August
          22, 1991 and on September 4, 1991. 

          Only the tenant responded.

          The Commissioner has reviewed all of the available evidence  based
          on the reconstruction of the record and has  carefully  considered
          that portion of the available record relevant to the issues raised 
          in the administrative appeal.

          The tenant commenced  this  proceeding  by  filing  an  overcharge
          complaint with the former New York City Conciliation  and  Appeals
          Board, the predecessor agency of the DHCR.  The tenant, who stated 
          he had taken occupancy of the subject apartment on June  15,  1982
          pursuant to a two-year sublease terminating June 15, 1984, alleged 
          that the prime tenant from whom he was subleasing was fictitious.

          The owner was served with a copy of the tenant's complaint and was 
          requested to submit complete copies of all leases or rent  records
          pursuant to Code Section 42A.

          The owner failed to provide a full rental history for the  subject

          Docket Number: AH 410009-RO

          In Order Number CDR 19,868, the Rent Administrator established the 
          lawful stabilization rent based on the owner's failure to submit a 
          complete rental history for the subject apartment and  directed  a
          refund of $4,802.78.

          In this petition, the owner contends that the complainant occupied 
          the subject premises without the owner's knowledge and is not  the
          tenant of record.  Therefore, the claim brought against the  owner
          should be set aside as not  against  the  proper  party.   In  the
          alternative, should the owner be found to be the proper party, the 
          owner requests the opportunity to submit  a  lease  history.   The
          petitioner asserts that any overcharges to be refunded  should  be
          reduced by reimbursements previously made.   Moreover,  the  owner
          contends that treble damages should be waived as the occurrence of 
          any overcharge was inadvertent and unintentional.

          In reply to the petition, the tenant  contends  that  the  owner's
          position vis-a-vis the  tenant's  occupancy  and  tenancy  of  the
          subject premises has been contraverted in  a  holdover  proceeding
          brought by the owner against the tenant in the Civil  Court,  City
          of New York where the court, finding that the owner had engaged in 
          a pattern of creating  illusory  tenancies  to  subvert  the  Rent
          Stabilization Law, granted the complainant all rights reserved  to
          a tenant under the Rent Stabilization Law.  Ress  Properties  Inc.
          v. Evone Rivera and John and Jane Doe, N.Y. Civ. Ct. Index No. 
          L&T 54449/85.

          Subsequent thereto, on September 16, 1988, based  on  the  Court's
          findings, the tenant filed a request for reconsideration, alleging 
          that  but  for  the  owner's   fraudulent   conduct,   the   legal
          stabilization rent would have been established at a lower  amount.
          Since the rent paid by the prior tenant was unknown,  that  figure
          was not used in the application of Section 42A default procedures. 
          The tenant submitted copies of leases of purported  prior  tenants
          to show that if the rent paid by the prior tenant had been  known,
          a much lower rent would have been established.

          After careful consideration, the Commissioner is  of  the  opinion
          that this petition should be granted in part.

          The petitioner's contention that it was not the proper party to be 
          charged in this proceeding was thoroughly discredited by the court 
          which found that in  violation  of  the  provisions  of  the  Rent
          Stabilization Law, an illusory tenancy was  used  as  a  means  to
          collect overcharges.  Under the doctrine of  collateral  estoppel,
          the judgment rendered in the civil action is conclusive as to this 


          Docket Number: AH 410009-RO

          issue.  Accordingly, the Commissioner finds that the petitioner is 
          the proper party and is responsible  for  any  overcharges  to  be

          The Commissioner notes that the petitioner had  ample  opportunity
          to submit a lease history to the Administrator but failed to do so 
          and  has  not  submitted  such  history  even  in   this   appeal.
          Therefore,  the  Commissioner   finds   that   the   Administrator
          appropriately defaulted the petitioner.

          However, the owner's assertion regarding a reimbursement and  rent
          adjustment has been confirmed by the tenant who  advises  that  in
          February 1983, the rent was reduced from $675.00  to  $588.50  and
          that  the  owner  tendered  a  reimbursement  for  the  difference
          collected since the inception of the tenancy.  As  a  result,  the
          overcharge should be recomputed as follows:

               Rent collected $588.50, Legal Stabilization Rent  $514.80
               Overcharge per month $73.70
               Pre April 1, 1984 overcharge:  
                                        $73.70 x 21.57 mos. = $1,589.71
               Post April 1, 1984 overcharge tripled: 
                                     $73.70 x 2.43 mos. x 3 = $  537.27
               Excess Security                                $   73.70
               Total Overcharge                               $2,200.68

          Code Section 2526.1(a)(1) provides a penalty of treble damages for 
          willful overcharges  and  creates  a  presumption  of  willfulness
          subject to rebuttal by the owner showing  non-willfulness  of  the
          overcharges by a preponderance of the evidence.

          Review of the evidence in the available record in the instant case 
          reveals that the owner did not submit any proof demonstrating that 
          the overcharge was not willful but in fact, the  available  record
          discloses  that  the  overcharge  was  willful.   Therefore,   the
          Commissioner finds that  the  imposition  of  treble  damages  was

          With respect to the  tenant's  request  for  reconsideration,  the
          Commissioner  notes  that  the  granting   of   the   request   is
          discretionary  and  that  an  Administrator's  order  is  properly
          challenged by  means  of  a  timely  Petition  for  Administrative
          Review.  Accordingly, the new evidence submitted by the tenant  on
          appeal is beyond the scope of review.

          Furthermore, the Commissioner notes that the Section  42A  default
          procedure utilized herein has  been  repeatedly  approved  by  the
          courts.   The  procedure  establishes  the  complaining   tenant's
          initial rent as the lowest of the following three figures:  a) the 
          final rent of the prior tenant, b) the complaining tenant's 

          Docket Number: AH 410009-RO

          initial rent minus the appropriate Guidelines increase and vacancy 
          allowance, and c) the lowest rent in the building or complex for a 
          comparable  apartment.   This  method  attempts   to   protect   a
          complaining  tenant's  right  to  a  lawful  rent  when  an  owner
          defaults.  The method is necessarily not exact, the actual  lawful
          rent could be either higher or lower than the rent as  established
          pursuant to Section 42A, even if all three  figures  used  in  the
          method are before the  Administrator.   Nevertheless,  the  courts
          have found the method to be  a  rational  one,  given  an  owner's
          default.  The method is applied for all defaulting owners, without 
          an inquiry as to whether the default was due, e.g., to a negligent 
          loss of rent records or to an intentional withholding of records.

          Accordingly, the tenant's untimely discovery of prior rent records 
          does not require  reconsideration  -  the  default  procedure  was
          designed both for the case when records are lost or misplaced  and
          the case when records have been deliberately withheld.  (The  fact
          that the tenant has submitted a prior lease  does  not  in  itself
          prove  whether  the  owner's  default  was  intentional  or  not.)
          Finally, the Commissioner notes  that  the  imposition  of  treble
          damages, as was done in this proceeding, adds a further measure of 
          protection to the tenant in a default case.

          Upon the expiration of the period in which the owner may institute 
          a proceeding pursuant to Article 78 of the Civil Practice Law  and
          Rules, this order may be filed and enforced as  judgment,  or  the
          tenant may offset against any rent thereafter due the owner not in 
          excess of twenty percent per month of the remaining overcharge.

          THEREFORE, in accordance with the Rent Stabilization Law and Code, 
          it is

          ORDERED, that this petition be, and the same hereby is, granted in 
          part, and the Rent Administrator's order be, and the  same  hereby
          is, modified in accordance with this order and opinion.


                                          ELLIOT SANDER
                                          Deputy Commissioner


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