AI 410316 RO
STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: AI 410316 RO
HESLIN IMPROVEMENTS INC., DRO DOCKET NO.: L-3111639-R/
PETITIONER TENANT: JOHN DI GIACOMO
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
The above-named petitioner-owner timely filed a Petition for
Administrative Review against an order issued on August 22, 1986,
by the Rent Administrator, at 10 Columbus Circle, New York, New
York concerning housing accommodations known as 160 First Avenue,
Apartment 4A, New York, New York wherein the Rent Administrator
established the stabilized rent and directed the owner to refund
$44,368.88 inclusive of treble damages.
The Commissioner notes that this proceeding was initiated prior to
April 1, 1984. Sections 2526.1(a)(4) and 2521.1(d) of the Rent
Stabilization Code effective May 1, 1987 governing rent overcharge
and fair market proceedings provide that determination of these
matters be based upon the law or code provisions in effect on March
31, 1984. Therefore, unless otherwise indicated reference to
sections of the Rent Stabilization Code (Code) contained herein are
to the Code in effect on April 30, 1987.
The Commissioner has reviewed all of the evidence in the record and
has carefully considered that portion of the record relevant to the
issues raised by the administrative appeal.
This proceeding was originally commenced on March 29, 1984 by the
filing of a complaint of rent overcharge.
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 Section 42A of the Code. The owner was advised that
its failure to provide the requested records would be considered a
AI 410316 RO
Although the owner requested an extension of time in which to
answer, there is no evidence of a response in the record.
In its appeal, the owner contends that since it had submitted an
answer to the complaint, the Administrator erred in applying
Section 42A default procedures. The owner submits a copy of the
answer as well as a certified mail receipt, date stamped June 26,
1986, showing the addressee as the Division of Housing and
Community Renewal (DHCR) as proof of the prior submissions. In the
answer, incorporated herein as the basis of the appeal, the owner
asserts that it purchased the subject building in June 1979 at
which time the subject apartment did not exist in its present form.
Some time subsequent to July 1982, the owner alleges that it
created two-three room units, one of which is the subject
apartment, by bisecting a six room apartment. By reason of this
creation, the owner contends that it was entitled to a first rent
and thus was not required to submit a rental history. In support
of the allegation, the owner submits a contractor's contract,
setting forth the estimated cost of the work to be done, and an
invoice for new appliances.
The owner posits as alternative that:
1) pursuant to the decision by the Appellate
Division, Second Department in JRD Management
Corp. v. Eimicke, 539 N.Y.S. 2nd 610, it was
not required to retain more than four years of
rental records, and,
2) that even if the apartment were to be found
ineligible for a first rent and that the
holding in JRD was inapplicable, the rent
should be set at the lowest apartment rent in
the same line not the lowest in the building.
Finally, the owner contends that treble damages should not be
imposed because the owner had made significant improvements and
reasonably believed that it was entitled to charge market rent.
Moreover, given the conflict between the Appellate Departments on
record- retention requirements, an owner should not be assessed
treble damages for non-compliance with a requirement one court has
found is not applicable.
The tenant contends that since the owner failed to comply with the
required formalities to change the number of apartments, the
subject apartment is illegal. The tenant states that a search of
the records at the Building Department and at Housing Preservation
and Development did not produce the documents requisite for a legal
alteration, an Alteration Application and Certificate of Occupancy.
The tenant submits copies of various records on file including a
diagram of the subject building.
AI 410316 RO
The Commissioner is of the opinion that this petition should be
After careful consideration of all the evidence, the Commissioner
finds that the owner has submitted insufficient proof of the
alleged alteration to justify a first rent. The owner did not
submit any floor plans of before and after, or cancelled checks.
Moreover, the tenant's submission shows that in the 1930's the
subject building contained twenty-two apartments. On the first
floor, there were two stores and two apartments. On floors two
through six, each floor contained four apartments, two four-room
units and two three-room units. DHCR rent registration records
show that the subject premises contained twenty two units as of the
latest registration - April 1, 1991. The Commissioner notes also
that the contractor listed on the renovation contract is located at
the same address as the owner and that the contractor's name "Symar
Contractors Inc. could be an amalgam of the owner's names, Seymour
Section 42A of the former Rent Stabilization Code requires 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 DHCR upon demand.
Section 26-516 of Rent Stabilization Law, effective April 1, 1984,
limited an owner's obligation to provide rent records by providing
that an owner may not be required to maintain or produce rent
records for more than 4 years prior to the most recent
registration, and concomitantly, established a 4 year limitation on
the calculation of rent overcharges.
It has been the DHCR's policy that overcharge complaints filed
prior to April 1, 1984 are to be 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.) The DHCR has therefore applied
Section 42A of the former Code to overcharge complaints filed prior
to April 1, 1984, requiring complete rent records in these cases.
In following this policy, the DHCR has sought to be consistent with
the legislative intent of the Omnibus Housing Act (Chapter 403,
Laws of 1983), as implemented by the New York City Conciliation and
Appeals Board (CAB), the predecessor agency to the DHCR, to
determine rent overcharge complaints filed with the CAB prior to
April 1, 1984 by applying the law in effect at the time such
complaints were filed so as not to deprive such tenants of their
right to have the lawful stabilized rent determined from the June
30, 1974 base date and so as not to deprive tenants whose
overcharge claims accrued more than 4 years prior to April 1, 1984
of their right to recover such overcharges. In such cases, if the
owner failed to produce the 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
AI 410316 RO
Associates v. CAB, 65 N.Y.2d 898, 493 N.Y.S.2d 455 (1985).
However, it has recently been held in the case of J.R.D. Mgt. 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), 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 than 4 years of rent records.
Since the issuance of the decision in JRD, the Appellate Division,
First Department, in the case of Lavanant v. DHCR, 148 A.D. 2d 185,
544 N.Y.S.2d 331 (App. Div. 1st Dep't 1989), has issued a decision
in direct conflict with the holding in JRD. The Lavanant court
expressly rejected the JRD ruling, finding that the DHCR may
properly require an owner to submit complete rent records, rather
than records for just four years, and that such requirement is both
rational and supported by the law and legislative history of the
Omnibus Housing Act.
Since the subject property is located in the First Department, the
decision by the Lavanant court governs. The owner herein was
correctly required to submit a complete rental history from the
With regard to the owner's contention that the Administrator should
have used the lowest rent in the same line instead of the lowest
rent of an apartment with the same room count in the building, it
is noted that the standard of considering apartments in the same
line as the apartment at issue was developed by the former
Conciliation and Appeals Board (CAB) as a way of achieving a rough
comparability. With the onset of registration requirements, since
1985 the DHCR has been using the lowest rent of an apartment with
the same room count in the building. Using registration records
and the standard of the lowest rent for a comparably sized
apartment throughout the building promotes the enforcement of the
Rent Stabilization Law and permits faster resolution of a tenant's
complaint by avoiding problems associated with the previous
1) the possibility that the selected apartment
itself has a illegal rent;
2) a line of apartments may not exist or maybe
difficult to ascertain.
The Code imposes a penalty of treble damages for all willful
AI 410316 RO
overcharges collected on and after April 1, 1984 unless an owner
proves by a preponderance of the evidence that the overcharge was
not willful. Because the owner has failed to meet its burden,
treble damages were warranted.
Accordingly, the Commissioner finds that the Administrator properly
set the lawful stabilization rent at $209.61 for April 16, 1986
through June 23, 1986 and directed a refund of $44,368.88.
Because this determination concerns lawful rents only through June
25, 1986 the owner is cautioned to adjust subsequent rents to an
amount no greater than that determined by the Rent Administrator's
order plus any lawful increase, and to register any adjusted rents
with this order and opinion being given as the explanation for the
This order may, upon the expiration of the period in which the
owner may institute a proceeding pursuant to Article Seventy-Eight
of the Civil Practice Law and Rules, be filed and enforced by the
tenant in the same manner as a judgment or not in excess of twenty
percent thereof per month may be offset against any rent thereafter
due the owner.
THEREFORE, in accordance with the Rent Stabilization Law and Code,
ORDERED, that this petition be, and the same hereby is, denied, and
that the Rent Administrator's order be, and the same hereby is,
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner