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

            ------------------------------------X 
            IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
            APPEAL OF                              DOCKET NO. AJ210330RO
                                                :  DRO DOCKET NO.K3103173R
                 MELVIN ZUCKERMAN                  TENANT: MAUREEN FYFFE  

                                  PETITIONER    : 
            ------------------------------------X                             
               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 










            AJ210330RO



            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 






            AJ210330RO


            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. 








            AJ210330RO

                 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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