AI 210176 RO

                                  STATE OF NEW YORK
                      DIVISION OF HOUSING AND COMMUNITY RENEWAL
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          -----------------------------------X SJR No.:  4375
          IN THE MATTER OF THE ADMINISTRATIVE  ADMINISTRATIVE REVIEW
          APPEAL OF                            DOCKET NO.: AI 210176 RO

               Charles Quimby,                 DISTRICT RENT ADMINISTRATOR
                                               DOCKET NO.: K-3103849-R
                                   PETITIONER
          -----------------------------------X

            ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
                    AFTER RECONSIDERATION PURSUANT TO COURT ORDER

          On September 23, 1986, the above-named  owner  filed  a  petition
          seeking administrative review of an order issued  on  August  19,
          1986, by the Rent Administrator at Columbus Circle, New York, 
          New  York,  concerning  the  housing  accommodations   known   as
          Apartment 3R at 642 President Street, Brooklyn, New York in which 
          order the Administrator had  determined  that  the  tenants  were
          paying excessive rent.

          On July 14, 1989, the Commissioner issued an  order  denying  the
          owner's appeal.  The owner then  petitioned  the  Supreme  Court,
          under Article 78 of the Civil Practice Law and Rules,  requesting
          that the Commissioner's order be annulled.

          On December 15, 1989, Justice Vaccaro granted  that  petition  to
          the extent of  remanding  this  matter  to  the  above-referenced
          Division for redetermination with reference, inter alia,  to  the
          case of J.R.D. Management v. Eimicke (discussed  below),  and  on
          June 26, 1991, the  Justice  denied  the  Division's  request  to
          reargue his order.

          This proceedi g  originated  when  the  tenants  of  the   above-
          referenced accommodation filed a complaint of  rental  overcharge
          with the predecessor of this Division.  

          After the owner had failed to respond to the  Division's  request
          for a complete rental history of the subject apartment, the  Rent
          Administrator issued the aforementioned order of August 19, 1986, 
          in which, utilizing the Section 42A default procedure,  he  found
          a rent overcharge and determined the lawful stabilization rent to 
          be $230.36 as of March 31, 1985.

          The  aforementioned  order  of  July   14,   1989,   upheld   the
          Administrator's order  in  the  face  of  several  arguments  not
          pertinent  here.   The  aforementioned  Article-78  petition  and
          present remand to the Commissioner followed.

          Before Justice Vaccaro the owners argued, inter  alia,  that  the
          rent in effect on April 1, 1980, must be deemed the base rent for 
          purposes of overcharge calculation.  The  court  ruled  that  the
          tenant would not be  entitled  to  a  Fair  Market  Rent  Appeal,






          AI 210176 RO
          instructing the Commissioner to  base  his  calculations  on  the
          tenant's initial rent with no right to challenge same.

          On remand the Commissioner, having considered the record  in  the
          light of the aforementioned order  of  the  Supreme  Court,  will
          grant this petition to the extent of recalculating the overcharge 
          herein.

          Section 42A of the former Rent Stabilization Code  required  that
          an owner retain complete records for each stabilized apartment in 
          effect from June 30, 1974  (or  the  date  the  apartment  became
          subject to rent stabilization, if later) to date and  to  produce
          such records to the rent agency upon demand.

          Section 26-516 of the Rent Stabilization Law, effective April  1,
          1984, limited an owner's obligation to produce  rent  records  by
          providing that an owner  may  not  be  required  to  maintain  or
          produce rent records for more than four years prior to  the  most
          recent registration and, concomitantly, established  a  four-year
          limitation on the calculation of rent overcharges.

          It had been the rent agency's policy that  overcharge  complaints
          filed prior to April 1, 1984 were processed pursuant to  the  law
          or code in effect on March 31, 1984.  (See  Section  2526.1(a)(4)
          of the current Rent Stabilization Code).  Section 42A of the Code 
          in effect on March 31, 1984 required an owner to submit  complete
          rent records going back to 1974 for such  overcharge  complaints.
          In following this policy, the rent agency had  sought  to  follow
          the legislative  intent  inherent  in  the  Omnibus  Housing  Act
          (Chapter 403, Laws of 1983), as implemented by predecessor agency 
          to the Division of Housing and Community Renewal (DHCR),  in  the
          determination of rent overcharge complaints filed  with  the  CAB
          prior to April 1, 1984 by applying the law in  effect at the time 
          such complaint were filed so as not to deprive  such  tenants  of
          their right to have the lawful stabilized  rent  deprive  tenants
          whose overcharge claims went back more than four years  prior  to
          April 1, 1984 of their right to recover all  such  required  rent
          records, the lawful stabilized rent would be determined  pursuant
          to the default procedure approved by the Court of Appeals  in  61
          Jane Street Associates v. New York Code Conciliation  and Appeals 
          Board,  65 N.Y.2d 898, 493 N.Y.S.2d 455 (1985).


          However, in the case of J.R.D. Management Corp. v.  Eimicke,  148
          A.D.2d 610, 539 N.Y.S.2d 667 (App. Div., 2d Dep't  1989),  motion
          for leave to reargue or for leave  to  appeal  to  the  Court  of
          Appeals denied, App. Div. 2d Dep't, N.Y.L.J., June 28, 1989, p.25 
          col.1, motion for leave to appeal to the Court of Appeals denied, 
          Court of Appeals, N.Y.L.J., Nov. 24, 1989, p.24, col.  4,  motion
          for leave to reargue denied, Court of Appeals, N.Y.L.J., Feb. 15, 
          1990, p.25, col. 1, it was held that the law  in  effect  at  the
          time of the determination of the administrative complaint  rather
          than the law in effect at the time of the filing of the complaint 
          must be applied and that the DHCR could not require an  owner  to
          produce more that four years of rent records.

          Following the issuance of the decision in J.R.D.,  the  Appellate
          Division, First Department, in the case of Lavanant  v.  Division
          of Housing and Community Renewal, 148 A.D.2d  185,  544  N.Y.S.2d






          AI 210176 RO
          331 (1989), issued a decision in direct conflict with the holding 
          in J.R.D.  The  Lavanant  court  expressly  rejected  the  J.R.D.
          holding, finding that the DHCR may require  an  owner  to  submit
          complete rent records, rather than records for not more than four 
          years, finding that that requirement is rational and is supported 
          by the language and legislative history of  the  Omnibus  Housing
          Act.

          Because in the instant case the subject apartment is  located  in
          the Second Judicial Department, and in accordance with the  Court
          directive, the DHCR is constrained to follow the J.R.D.  decision
          in determining the tenant's overcharge  complaint,  limiting  the
          requirement for the submission of rent records to no earlier than 
          April 1, 1980. 

          The record reflects that the apartment in question was subject to 
          New York City rent control on that date, and  moreover  that  the
          first stabilized lease (that of the complaining  tenants  herein)
          commenced on January 1, 1982.  The $400 monthly rent  under  that
          lease is, under the Rent Stabilization Code,  the  initial  legal
          regulated rent for the subject accommodation.   Recalculation  of
          the lawful stabilized rent in the succeeding lease  --  the  only
          one that was before the Administrator -- shows that there was  no
          overcharge in the $428 rent collected thereunder.

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

          ORDERED, that this petition be and the same hereby is granted and 
          the Rent Administrator's order, revoked.  The maximum lawful rent 
          for the subject premises was $428.00 per month on March 31, 1985; 
          and it is


          FURTHER ORDERED, that if the owner has already complied with  the
          Administrator's order and there are arrears due to the owner as a 
          result of the instant determination, the tenants may pay off  the
          arrears in twenty-four monthly  installments.   Should  a  tenant
          vacate after the issuance of this order or have already  vacated,
          such arrears shall be payable immediately.

          ISSUED:
           
                                                       ELLIOT SANDER
                                                       Deputy Commissioner


    

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