Docket No. AI 420183-RO

                                 STATE OF NEW YORK 
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                              JAMAICA, NEW YORK  11433

          APPEAL OF                               DOCKET NO. AI 420183-RO

                                                  DISTRICT RENT
                                                  ADMINISTRATOR'S DOCKET
          Schleswig House, Inc.                   NO. LC 000216-AD


              On September 17, 1986, the above-named landlord timely filed a 
          petition for administrative review of an order issued on July 11, 
          1986 by a District Rent Administrator concerning the housing 
          accommodation known as Apartment 2-B, 21 East 62nd Street, New 
          York, New York.

              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 petition for review.

              This procedure was commenced by the subject tenant filing an 
          overcharge complaint, dated March 5, 1984.  The tenant's complaint 
          alleged that the landlord is collecting $275.00 per month in rent, 
          and that the tenant further alleged that the subject apartment's 
          rent should be $125.12 per month, pursuant to the rent agency's 

              To the complaint the tenant attached a copy of the subject 
          apartment's rent registration card.

              The tenant first took occupancy on October 1, 1968.

              The subject landlord alleged in its answer to the tenant's 
          complaint, dated May 8, 1984, that the tenant first took occupancy 
          of the subject apartment in 1968, and has used the subject 
          apartment from that time until January 31, 1984 for "commercial 
          purposes"; that the subject tenant had paid rent for the subject 
          apartment using checks from his business account, and that after 
          January 31, 1984, the tenant has attempted to remodel the apartment 
          without permission of the landlord to show that it was used for a 
          residential pupose.

          Docket No. AI 420183-RO

              To its answer the landlord attaches a copy of an affidavit by 
          the petitioner's Vice-President in which he requested a Section 36 
          proceeding (under the former code), and that the subject apartment 
          "be declared exempt from rent control because it is being used as 
          a commercial premises."  The affidavit further alleged that the 
          subject tenant had been using his apartment for commercial 
          purposes; that the subject tenant had been using his apartment for 
          a hair salon, and that the subject tenant resided most of the time 
          outside of the United States.

              The subject landlord submitted to the Administrator an 
          affidavit from an alleged neighbor of the subject tenant, Dr. Earl 
          DiPirro, sworn to on August 31, 1984, which stated that he has 
          resided at Apartment 2A in the subject building for more than 3 1/2 
          years from the above-mentioned date; that during that time he has 
          observed that the door to the subject tenant's apartment during the 
          daytime was open; that he has seen the inside of the subject 
          apartment while walking past the subject apartment; that he saw 
          manicurists working in the subject apartment; that there was a 
          "constant influx of customers from the salon and employees of the 
          salon," and that there were big pictures of hair models on both 
          sides of the doorway.

              The subject landlord also submitted to the Administrator an 
          affidavit from Genevieve Adler, an alleged former employee of the 
          subject tenant, which was sworn to on October 15, 1984, which 
          stated that she was a tenant at the subject building for ten years; 
          that she was an employee at the subject tenant's hair salon, until 
          January 1, 1984; that the subject apartment was used by the hair 
          salon for manicures; that "various principals of the salon used 
          that apartment for business appointments and a mail order business 
          involving the importation and sale of various types of hair rollers 
          was conducted from that apartment"; that the hair salon's 
          bookkeeper inspected the business' records in the subject 
          apartment; that the hair salon's record were maintained in file 
          cabinets which were kept in the subject apartment, and that the 
          subject tenant did not reside in the subject apartment.

              In response to the landlord's answer the subject tenant 
          submitted to the Administrator an affidavit which was sworn to on 
          January 31, 1985, which stated that "any alleged business use made 
          of my apartment were not made with my knowledge or consent, but 
          were undertaken by other officers," of the hair salon; that Dr. 
          DiPirro was rarely home; that Genevieve Adler left the hair salon 
          "under less than friendly terms"; that "Ms. Adler's affidavit is 
          misleading because she does not state that she personally viewed 
          any alleged business use of my apartment, that I was present during 
          any alleged business use of my apartment, that I was present during 
          such alleged business use, nor that I was aware of such alleged 
          business use," and that the subject landlord has admitted that 
          since January, 1984 there has been no commercial use of the subject 

          Docket No. AI 420183-RO


              The subject tenant also submitted to the Administrator an 
          affidavit by Marilyn Surgill, sworn to on January 31, 1985, which 
          stated that she has resided in the subject building for 3 1/2 
          years; that she had "seldom seen Dr. DiPirro in the building"; that 
          to the best of her knowledge the subject tenant had not used the 
          subject apartment for business purposes; that she had discussed 
          with the landlord the possibility of exchanging her apartment for 
          the subject tenant's apartment's; that the landlord had a key to 
          the subject tenant's apartment; that the landlord had accompanied 
          her while she inspected the subject tenant's apartment, and that 
          during her inspection of the subject apartment she did not see any 
          evidence that it was being used for business purposes.

              On December 20, 1985 a physical inspection of the subject 
          apartment was carried out by the Division of Housing and Community 
          Renewal (DHCR).  The inspector's report noted that the subject 
          apartment has a living room which has a couch, four lamps, four 
          chairs, a television set, a desk, a bookcase, and a kitchen which 
          has a refrigerator with food in it, and a stove.  The inspector 
          also noted that the closets in the subject apartment were full of 

              On March 3, 1986, the rent agency mailed to the parties a 
          "Notice of Commencement of Proceeding to Determine Facts or Fix 
          Maximum or Legal Regulated Rent," pursuant to Section 36 of the 
          former code.  The notice proposed to establish the legal regulated 
          rent at $125.12 per month, effective as of the date of occupancy, 
          and to adjust the rent to $143.89 per month, effective October 1, 
          1968, for the execution of a two year lease agreement.  The notice 
          afforded the parties to this proceeding an opportunity to file an 
          answer to the proposed action set forth in the notice, within 
          twenty days of the above-mentioned date.

              In response to the above-mentioned notice the tenant submitted 
          a response, dated March 8, 1986, which stated that he agreed with 
          the proposed findings of the District Rent Administrator.

              The landlord's response, dated March 21, 1986, asserted that 
          the subject apartment was rented to the subject tenant; that the 
          subject tenant operates a beauty salon in the first floor of the 
          subject building; that in 1984 the subject tenant filed an 
          overcharge complaint with the rent agency; that the landlord found 
          out that the subject apartment "was being used exclusively as an 
          extension of the beauty salon, and thus for commercial purposes"; 
          that the landlord then commenced a summary proceeding in Civil 
          Court alleging the commercial use of the subject apartment, but the 
          court proceeding was stayed pending the rent agency's 
          determination, and that the subject landlord requested a hearing so 
          that the landlord's witnesses can testify regarding the use of the 
          subject apartment.

          Docket No. AI 420183-RO

              In the order under review herein, the Administrator determined 
          that the subject apartment was rent controlled; that the maximum 
          rent, effective as of the date of the subject tenant's occupancy, 
          was $125.12 per month; that the maximum rent was to be adjusted to 
          $143.84 per month, pursuant to a two-year lease agreement, 
          effective October 1, 1968, and that the subject landlord was 
          directed to refund to the subject tenant "all rent collected in 
          excess of the maximum rent fixed or established by this order 
          during the period beginning no earlier than two years prior to 
          February 7, 1985... with 6% interest from the date of each 
          excessive payment of rent."

              The landlord's petition alleges that the Administrator's order 
          should be revoked as there was no hearing, and that the landlord 
          did not receive a copy of the Administrator's order.

              To its petition the landlord attaches a copy of an affidavit by 
          the landlord's attorney which asserts that he and the subject 
          landlord did not receive a copy of the Administrator's order; that 
          the petition is timely filed; that the subject tenant was using his 
          apartment for commercial purposes; that the subject landlord had 
          requested a hearing in the proceeding in front of the 
          Administrator; that a hearing was never scheduled; that the 
          Administrator's order "merely adjusted the rent but made no mention 
          of the allegations of commmercial use of the premises"; that the 
          Administrator's order did not state why a hearing was not 
          scheduled; that the Administrator's order "overlooks the fact that 
          highly credible witnesses were available to testify in the matter," 
          and that the Administrator did not give the subject landlord an 
          opportunity to substantiate its allegations.

              The subject tenant did not submit a response to the landlord's 

              After careful consideration, the Commissioner is of the opinion 
          that the landlord's petition should be granted.

              The Commissioner notes that the record is not clear as to 
          whether the rent agency mailed a copy of the Administrator's order 
          to the subject landlord.  Accordingly, the Commissioner finds that 
          the landlord's petition shall be deemed to have been filed timely.

              Pursuant to Section 2207.5 of the City Rent and Eviction 
          Regulations, the scheduling of a hearing by an Administrator is 
          discretionary not mandatory.  Accordingly, the Commissioner finds 
          that the mere fact that the Administrator did not schedule hearings 
          will not warrant a revocation of the Administrator's order in this 

              The Commissioner notes that in the proceeding in front of the 
          Administrator the tenant stated that, "any alleged business use 

          Docket No. AI 420183-RO

          made of my apartment were not made with my knowledge or consent, 
          but undertaken by other officers of Aurelian Lintermans, Inc."  
          (The Commissioner notes that Aurelian Lintermans, Inc., is the name 
          of the company, owned by the subject tenant, which operates the 
          beauty parlor in the subject building.)

              Although the subject tenant denied that he had any "knowledge 
          or consent" of a commercial use of the subject apartment, the 
          Commissioner finds that the subject tenant did not deny the subject 
          landlord's assertion that the subject apartment was used for a 
          commercial purpose.

              As to the affidavit submitted by Dr. Dipirro, the Commissioner 
          finds that the subject tenant did not dispute the specific 
          allegations contained in Dr. Dipirro's affidavit pertaining to the 
          commercial use of the subject apartment.

              The Commissioner notes that in response to Genevieve Adler's 
          affidavit the subject tenant asserts that Genevieve Adler is not a 
          credible witness, and that "she does not state that she personally 
          viewed any alleged business use" of the subject apartment.  The 
          Commissioner finds that the subject tenant does not deny the 
          specific allegations contained in Genevieve Adler's affidavit 
          pertaining to the commercial use of the subject apartment.

              Accordingly, the Commissioner finds that based on a 
          preponderance of the evidence contained in the record the subject 
          apartment was used for a commercial purpose.

              As the subject apartment was used for a commercial purpose, the 
          Commissioner finds that the subject apartment is exempt from rent 
          control for the duration of the subject tenant's occupancy.

              The Commissioner further finds that this order does not 
          prejudice the rights of subsequent tenants of the subject 

              THEREFORE, in accordance with the City Rent and Rehabilitation 
          Law, and the Rent and Eviction Regulations, it is

              ORDERED, that the landlord's petition be, and the same hereby 
          is, granted, and that the order issued by the Rent Administrator on 
          July 11, 1986, under Docket No. LC 000216-AD, be, and the same 
          hereby is, revoked.


                                             Joseph A. D'Agosta
                                             Acting Deputy Commissioner


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