AJ 410108 RO and AJ 410109 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 NOS. AJ 410108 RO
and AJ 410109 RO
141 Avenue A Investors, Inc. : DISTRICT RENT OFFICE
and DOCKET NO. L-3112111-R
Gaelle Machard,
TENANT: Elizabeth Finch
PETITIONERS:
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ORDER AND OPINION GRANTING PETITIONS IN PART
On October 9, 1986, the above-named owners each filed a Petition
for Administrative Review against an order issued on September 5,
1986, by the Rent Administrator, Columbus Circle, New York,
New York, concerning the housing accommodations known as 438 East
9th Street, New York, New York, Apartment No. 8, wherein the Rent
Administrator determined that the owners had overcharged the
tenant.
The tenant had originally commenced this proceeding by filing a
complaint of rent overcharge. The complaint stated inter alia,
that although the tenant had moved into the subject apartment
pursuant to a lease calling for the payment of rent, she had been
a non-rent-paying building superintendent until May 1, 1983, and
was therefore seeking no reimbursement as to any time before that
date.
In his order the Rent Administrator: stated that the owners (prior
and current) had failed to provide a full rental history;
calculated the legal regulated rent from a "base" of $69.12; and
determined a rent overcharge, including treble damages on the
overcharge occurring on and after April 1, 1984.
In these petitions, the first-listed of the above-referenced owners
("the current owner" herein), argues in pertinent part that because
it negotiated no lease with the tenant during the relevant period,
because the rent for the period was consistent with the prior
owner's representation in the sales contract, and because it had
requested a hearing on willfulness before the Administrator, the
latter should not have trebled any of the overcharge found herein
and that it first acquired title to the subject premises in October
1984. The current owner submits a copy of a deed showing it
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acquired title on October 16, 1984. The other (prior) owner
asserts inter alia: that there was no "default" herein, as she had
supplied a complete rental history to the Administrator; that
because the initial stabilized rent, under a 1972 Report of
Statutory Decontrol filed for the subject apartment, was $70, the
Administrator erred in employing a base rent of $69.12; that no
overcharge should have been found for the period during which the
tenant was a non-rent-paying superintendent; and that rent
increases should have been granted for certain renovations done
during the tenant's occupancy.
The tenant responds to the petitions by stating inter alia: that in
fact she always paid rent, pursuant to an agreement placing the
value of her services at $300 (rendering any physical transfer of
money ridiculous); that there is judicial precedent to the effect
that an owner's mere continuance of a rental arrangement negotiated
by his predecessor can justify treble damages; and that because she
consented to no increase for renovations, none could have been
assessed.
After careful consideration of the record, the Commissioner is of
the opinion that these petitions should be granted in part.
As stated above the Administrator's order declares the owners'
default; and the base rent used appears to have been derived
through methodology used in default situations. The record,
however, contains a complete rental history, including a Statutory
Notice of Decontrol indicating an initial stabilized rent of $70.
The latter is thus the proper base rent, and the attached rent-
calculation chart -- hereby incorporated herein -- therefore begins
with that figure as the first lawful regulated rent.
It will be noted that that chart contains no refundable overcharge
for any time before May 1, 1983. Applicable law removes from the
purview of the Rent Stabilization Code, apartments while occupied
by owners' employees residing therein as part of their compensation
for work done in the buildings in which such apartments are
located. Since it is undisputed that this describes the tenant's
situation herein through April 30, 1983, the Administrator erred in
calculating an overcharge for that period.
The Commissioner will summarily reject the prior owner's contention
regarding the costs of improvements to the premises because of
(inter alia) the undisputed fact that the tenant gave no written
consent to any such improvement.
The final issue concerns treble damages. Such damages are the
norm, the exception to their imposition being when the owner
establishes before the Administrator, that the overcharges were not
willful. The law, moreover, imposes on new owners the
responsibility of securing rental records from their predecessors.
Given that responsibility and in view of what prompt perusal of
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those records would have shown, the Commissioner concludes that the
current owner did not carry its burden of proof regarding
willfulness, and could not have shown otherwise at a hearing. The
Administrator's assessment of treble damages will therefore be
affirmed.
Section 2526.1(f) of the Rent Stabilization Code provides in
pertinent part that for overcharges collected prior to April 1,
1984, an owner will be held responsible only for his or her portion
of the overcharge, in the absence of collusion or any relationship
between such owner and any prior owners, and that for overcharge
complaints filed or overcharges collected on or after April 1,
1984, a current owner shall be responsible for all overcharge
penalties, including penalties collected by any prior owner.
In the instant case, examination of the records discloses no
evidence of collusion or of any relationship between the present
owner and any prior owner. Pursuant to Section 2526.1(f): the
prior owner is individually responsible for overcharges collected
from May 1, 1983 until March 31, 1984, that is, $1850.35, the prior
owner and the current owner are jointly and severally liable for
overcharges collected between April 1, 1984 and November 1, 1984 --
the first rent payment date following transfer of ownership --
(inclusive of treble damages), that is, $3622.29; and the current
owner is individually responsible for overcharges collected from
November 1, 1984 through July 31, 1986 (inclusive of treble damages
and excess security), that is, $11,039.36.
Because this determination concerns lawful rents only through July
31, 1986, the owner is cautioned to adjust subsequent rents to an
amount no greater than that determined by the Rent Administrator's
order plus any lawful increases, and to register any adjusted rents
with this order and opinion being given as the explanation for the
adjustment.
This order may, upon the expiration of the period in which the
owners may institute a proceeding pursuant to Article 78 of the
Civil Practice Law and Rules, be filed and enforced in the same
manner as a judgment, or not in excess of twenty percent per month
thereof may be offset against any rent thereafter due the owner.
THEREFORE, in accordance with the Rent Stabilization Law and Code,
it is hereby
ORDERED, that these petitions be, and the same hereby are, granted
in part and that the Rent Administrator's order be, and the same
hereby is modified in accordance with this order and opinion.
ISSUED:
AJ 410108 RO and AJ 410109 RO
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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