AJ 410108 RO and AJ 410109 RO
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          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     


          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 

          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 

          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 

          AJ 410108 RO and AJ 410109 RO

          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 

          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 

          AJ 410108 RO and AJ 410109 RO

          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 

          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 

          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.


          AJ 410108 RO and AJ 410109 RO

                                          JOSEPH A. D'AGOSTA
                                          Acting Deputy Commissioner



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