AJ210331RO
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. AJ210331RO
: DRO DOCKET NO.K3103148R
MELVIN ZUCKERMAN TENANT: FERRELL/WASHINGTON
PETITIONER :
------------------------------------X
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW IN
PART
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. 4R, 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 tenants in which
the tenants stated in substance that they first moved to the subject
apartment in April, 1983 at a rental of $570.00 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 23,135, 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 $1913.37 during the
period from April 15, 1983 through April 30, 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
AJ210331RO
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.
Subsequently, on July 2, 1987, a new owner advised that it had
purchased the subject premises and wished to be kept informed of the
proceedings herein.
In answer to the petition, the tenant stated in substance that
the owner's petition should be denied and that the Rent
Administrator's order should be updated to take into account
subsequent renewal leases.
The Commissioner is of the opinion that this petition should be
granted in part.
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
AJ210331RO
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
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. However 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. Accordingly the legal
regulated rent effective April 15, 1983 is established as the
average of the lowest stabilized rent in the building for the same
size apartment - $429.00 (for apartment 1R) and the complaining
tenant's vacancy rent of $570.00 minus a guideline adjustment of 4%
pursuant to Guideline 14 (no vacancy allowance applicable under such
guideline) = $548.08 divided by two =$488.54. The prior tenant's
last rent is not known. The rent overcharge from April 15, 1983 to
April 30, 1984 is then determined as follows: rent overcharge of
AJ210331RO
$81.46 per month (rent charged of $$570.00 minus $488.54) times
12.57 months plus interest on the overcharge occurring on and after
April 1, 1984 plus excess security equals $1123.74. 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.
With regard to the tenants' contention that the overcharge
amount should have been updated, it is noted that the tenants did
not file their own petition regarding this matter and it cannot be
considered herein.
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.
If the owner has already complied with the Rent Administrator's
order and there are arrears due to the owner as a result of the
instant determination, the tenant shall be permitted to pay off the
arrears in twenty four equal monthly installments. Should the
tenant vacate after the issuance of this order or have already
vacated, said arrears shall be payable immediately.
The Commissioner has determined in this Order and Opinion that
the owner collected overcharges of $1123.74. This Order may, 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, be filed and enforced as a judgment or 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, or where the
tenant files this Order as a judgment, the County Clerk 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, granted in part, and, that the order of the Rent
Administrator be, and the same hereby is, modified in accordance
AJ210331RO
with this order and opinion. The amount of the rent overcharge
through April 30, 1984 is $1123.74.
ISSUED
JOSEPH A. D'AGOSTA
Deputy Commissioner
|
