AJ 210531 RO
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.: AJ 210531 RO
BJP Incorporated, DISTRICT RENT ADMINISTRATOR
DOCKET NO.: K-3107668-RT
PETITIONER CDR 24645
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART
On October 30, 1986 the above named petitioner owner filed a
Petition for Administrative Review against an order of the Rent
Administrator issued October 15, 1986. The order concerned
housing accommodations known as Apt. 12 located at 467 Pacific
Street, Brooklyn, New York. The Administrator determined that
the tenant had been charged excess rent and fixed the amount at
$1718.34 including interest and excess security.
The Commissioner has reviewed the record and carefully
considered that portion relevant to the issues raised by this
appeal.
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 overcharged and fair market rent 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 tenant commenced this proceeding by filing a Fair Market
Rent Adjustment application on March 29, 1984. The application
included a statement by the tenant to the effect that he moved
into the subject apartment on July 1, 1974 at a monthly rent of
$160.00. The tenant stated his belief that the rent charged and
paid on June 30, 1974 was $65.00 per month.
The application was served on the prior owner on January 29,
1985 along with a request for a copy of the Notice of Initial
Legal Regulated Rent, (DC-2) plus proof of service, on the first
stabilized tenant. The Administrator also demanded a complete
rental history from the base date. On August 5, 1985 the
Administrator informed the owner that the fair market rent would
be determined by considering:
"The maximum Rent for the unit in question plus the
Special Guidelines order issued by the Rent Guidelines
Board in effect when this tenant moved in; and
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A Comparability study of rents for the subject line
and, if you choose, rents prevailing in the same area
for substantially similar housing accommodations."
A response was received on September 4, 1985 from 97 Bergen
Street Corp. who advised that it was the new owner of the subject
building as of July 5, 1985. Two leases were submitted, one for
the period March 1, 1979 to February 28, 1980 and for the period
from January 1, 1984 to December 31, 1985. Another request for
comparability data was sent to the then owner on February 20,
1986 and a Final Notice of Pending Default was sent on July 31,
1986. No response was received.
In the absence of any comparability data, the Administrator
determined the rent by use of the Maximum Base Rent (MBR)
increased by the percentage provided for in the Special
Guidelines Order issued by the Rent Guidelines Board. The
Administrator also utilized the rental history provided by the
parties, although said history did not include the period from
March 1980 to January 1984.
Initially, the Administrator determined that the Emergency
Tenant Protection Act prescribed that Fair Market Appeals
challenging an initial rent must be rejected if the initial rent
does not exceed a formula specified in the Emergency Tenant
Protection Act (the 1974 Maximum Rent under rent control plus an
appropriate guidelines allowance). The rent resulting from
application of that formula in this case is $146.82.
Since the initial rent being challenged in this case
exceeded the level which the statute established as the standard
for permitting a Fair Market Rent Appeal, the tenant's appeal was
not rejected.
The Administrator went on to find that the tenant had been
charged excess rent and computed the total at $1718.34 including
interest on all excess rent charged after April 1, 1984.
The new owner of the subject apartment, petitioner herein,
filed this appeal from the above described order. The petitioner
requests reversal stating that it bought the building on April 2,
1986 and made substantial improvements therein. Petitioner
claims that the tenant was overcharged during a period when they
did not own the building and that all leases in its possession
were supplied to the Administrator. Petitioner claims its
"belief" that the tenant's initial lease for $160.00 per month
began in 1976 and not 1974 as found by the Administrator and
takes issue with the Administrator's finding that the legal
regulated rent in 1976 was $146.82. The petitioner also asserts
that it submitted five leases to the Administrator but only three
are reflected in the rent calculation chart. Copies of five
leases were attached to the petition.
Finally, the petitioner contends that the Administrator
failed to include certain surcharges allowed by the rent
guidelines for low rents. The tenant did not file a response.
After a careful review of the evidence in the record the
Commissioner is of the opinion that this petition should be
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granted in part.
A review of the record reveals that the Administrator
properly determined the fair market rent for the subject
apartment and the excess rent to be refunded to the tenant. In
the absence of comparability data the initial rent was computed
by increasing the 1974 Maximum Base Rent of $127.67 by 15% as
stated in Rent Guidelines Board Order No.6. Subsequent increases
were allowed based on the two leases submitted by the prior
owner. The other leases that the owner claims were submitted
were not in the record before the Administrator and pursuant to
section 2529.6 of the Rent Stabilization Code may not be
considered for the first time on appeal in the absence of proof
that they were submitted to the Administrator or could not
reasonably have been offered or included in the proceeding prior
to the issuance of the order being appealed. Since the record
contains a package of documents submitted by the prior owner to
the Administrator, there is no reason to conclude that additional
leases were also submitted.
A review of the Administrator's computations reveals that
appropriate increases were added for low rents as authorized by
the applicable guidelines.
There is also no basis for the petitioner's contention that
the complaining tenant's initial lease commenced in 1976 rather
than 1974. The tenant and the prior owner agreed that the tenant
first took occupancy on July 1, 1974 and the petitioner has
submitted no evidence to substantiate a different date.
Finally, the petitioner is advised that an owner is
responsible only for his or her portion of the excess rent
actually collected and since the petitioner did not purchase the
building until 1986 and the excess rent determined by the
Administrator was only up through December 1984, the petitioner
is not responsible for any of it.
The tenant may proceed against the former owner in a court
of competent jurisdiction to recover the excess rent computed by
the Administrator.
THEREFORE, in accordance with the Rent Stabilization Law and
Code, it is
ORDERED, that this petition be and the same hereby is
granted to the extent of determining that the petitioner is not
responsible for the excess rent owed to the tenant but the
Administrator's order is affirmed in all other respects.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
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