AJ210330RO
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
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IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. AJ210330RO
: DRO DOCKET NO.K3103173R
MELVIN ZUCKERMAN TENANT: MAUREEN FYFFE
PETITIONER :
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On October 23, 1986, the above-named petitioner-owner filed a
Petition for Administrative Review against an order issued on
September 25, 1986, by the Rent Administrator, 10 Columbus Circle,
New York, New York, concerning the housing accommodations known as
222 Lenox Road, Brooklyn, New York, Apartment No. 1W, wherein the
Rent Administrator determined that the owner had overcharged the
tenant.
The Administrative Appeal is being determined pursuant to the
provisions of Section 2526.1 of the Rent Stabilization Code.
The issue herein is whether the Rent Administrator's order was
warranted.
The Commissioner has reviewed all of the evidence in the record
and has carefully considered that portion of the record relevant to
the issue raised by the administrative appeal.
This proceeding was originally commenced by the filing in
March, 1984 of a rent overcharge complaint by the tenant in which
the tenant stated in substance that she first moved to the subject
apartment in November, 1983 at a rental of $473.20 per month.
In answer to the tenant's complaint, the owner stated in
substance that he is a federally appointed receiver appointed during
the pendency of a federal foreclosure action against the subject
premises and has not been able to obtain a rental history for the
subject apartment. In support of such contention, the owner
submitted a copy of a letter dated August 23, 1984 from the U.S.
Attorney to that effect and a copy of the court order appointing the
owner herein as receiver.
In Order Number CDR 23,432, the Rent Administrator determined
that due to the owner's failure to submit a complete rental history,
the tenant had been overcharged in the amount of $994.19 during the
period from November 1, 1983 through October 31, 1984, including
interest on the overcharge occurring on and after April 1, 1984 and
directed the owner to refund such overcharge to the tenant as well
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as to reduce the rent.
In this petition, the owner alleges in substance that it could
not obtain rent records from the foreclosed owner of record; that he
is preparing a request for preemption of the rent stabilized rents
with the Department of Housing and Urban Development (HUD) since the
U.S. Government holds the mortgage and the rents are inadequate to
maintain and operate the subject premises; and that the rent of the
subject apartment should be recomputed in accordance with any
schedule of fair market rents to be proposed by HUD.
The record shows that a new owner has now purchased the subject
premises.
In answer to the petition, the tenant stated in substance that
the owner's petition should be denied.
The Commissioner is of the opinion that this petition should be
denied.
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) and to produce such records to the
DHCR upon demand.
Section 26-516 of the 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 to
produce rent records for more than four (4) years prior to the most
recent registration, and concomitantly, established a four 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 rights 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 four years prior to April 1, 1984 of the 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
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of Appeals in 61 Jane Street 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. Mgmt.
v. Eimicke, 148 A.D.2d 610. 539 N.Y.S. 2d 667 (App. Div. 2d Dept.,
1989). motion for leave to reargue or for leave to appeal to the
Court of Appeals denied ( App. Div. 2d Dept., 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 four 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 Dept. 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 in the instant case the subject dwelling unit is located
in the Second Department, the DHCR is constrained to follow the JRD
decision in determining the tenant's overcharge complaint, limiting
the requirement for rent records to April 1, 1980.
In this case, the owner failed to submit a rental history from
April 1, 1980 so that a default still occurred. Pursuant to a DHCR
processing directive in cases where rent records are not available
upon judicial sale, the DHCR will establish the legal regulated
rents as the average of: a) the lowest stabilized rent in the
building for an apartment with the same number of registered rooms;
b) the complaining tenant's initial rent minus the guidelines (1 or
2 year allowance and the vacancy allowance); and c) the prior
tenant's last rent, if known. The records in the instant case
disclose that such a judicial sale occurred. However if an average
is taken of items a and b above (item c is not known) the rent would
be established at $344.83 (item a is $397.65 and item b is $292.00).
The amount of $344.83 is a lower rent than that determined by the
Rent Administrator - $397.65 - and therefore the use of this method
would increase the amount of the overcharge. Since the tenant did
not file a timely petition of administrative review, the
Commissioner deems it appropriate not to use this processing
procedure and to simply deny the owner's petition. Further contrary
to the owner's contention on appeal, there is no evidence that the
rent of the subject apartment was federally preempted and reset by
HUD.
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The owner is directed to reflect the findings and
determinations made in this order on all future registration
statements, including those for the current year if not already
filed, citing this order as the basis for the change. Registration
statements already on file, however, should not be amended to
reflect the findings and determinations made in this order. The
owner is further directed to adjust subsequent rents to an amount no
greater than that determined by this order plus any lawful
increases.
The Commissioner has determined in this Order and Opinion that
the owner collected overcharges of $994.19. Upon expiration of the
period for seeking review of this Order and Opinion pursuant to
Article Seventy-eight of the Civil Practice Law and Rules not in
excess of twenty percent per month of the overcharge may be offset
against any rent thereafter due the owner. Where the tenant credits
the overcharge, the tenant may add to the overcharge interest at the
rate payable on a judgment pursuant to Section 5004 of the Civil
Practice Law and Rules from the issuance date of the Rent
Administrator's Order to the issuance date of the Commissioner's
Order.
THEREFORE, in accordance with the Rent Stabilization Law and
Code, it is
ORDERED, that this petition for administrative review be, and
the same hereby is, denied, and, that the order of the Rent
Administrator be, and the same hereby is, affirmed.
ISSUED
JOSEPH A. D'AGOSTA
Deputy Commissioner
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