AK 110251-RO

                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          ------------------------------------X  SJR 3023  (Remit)
          APPEAL OF                              DOCKET NO. AK 110251-RO
                                                            CDR 25575

                                              :  DISTRICT RENT OFFICE
               Sharon Towers Realty,             DOCKET NO. Q-3120440-R

                                                 TENANT: Krikor Kasparian

                                PETITIONER    : 


          On November 17, 1986 the  above-named  petitioner-owner  filed  a
          Petition for Administrative Review against  an  order  issued  on
          October 31, 1986 by the Rent Administrator, 10  Columbus  Circle,
          New York, New York concerning the  housing  accommodations  known
          as 62-59 108th Street, Forest Hills, New York, Apartment No. 3-R
          wherein the Rent Administrator  determined  that  the  owner  had
          collected a rent overcharged and directed  the  owner  to  refund
          the overcharge to the tenant.

          On December 29, 1987 the petition was  granted  in  part  by  the
          assessment of interest rather than treble  damages,  and  by  the
          allocation of overcharges between present and past owners.

          Subsequent thereto, the petitioner-owner filed a Petition in  the
          Supreme Court pursuant to Article 78 of the  Civil  Practice  Law
          and Rules.  The  proceeding  was  remitted  to  the  Division  of
          Housing and Community Renewal (DHCR) to determine the lawful rent 
          based on the rental history from 1976, and the  owner's  petition
          is herein decided on the merits.

          The issue herein is whether the Rent  Administrator's  order  was

          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 in March,  1984  by  the
          tenant filing a rent overcharge complaint,  in  which  he  stated
          that he had commenced occupancy on June 1,  1978  at  a  rent  of
          $260.44 per month.

          In the Order appealed herein, the Administrator  determined  that
          the owner had failed to provide a full  rental  history  for  the
          subject apartment.  As a result, a rent overcharge was  found;  a
          refund ordered; and treble damages were assessed on that part  of

          AK 110251-RO
          the overcharge collected on or after April 1, 1984.

          In its Petition, the current owner essentially asserted  that  it
          purchased the subject building on June 1,  1981;  that  the  only
          rental records it received from the former owner were leases then 
          in effect, other than documents indicating that a rent of $245.00 
          was paid in a lease beginning in approximately March, 1976;  that
          a prior owner had purchased the subject building  pursuant  to  a
          judicial sale; and that  the  monthly  rentals  charged  for  the
          subject apartment have always been lawful.

          After a careful consideration of the entire evidence  of  record,
          the Commissioner is of the  opinion  that  the  owner's  petition
          should be granted.
          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 of  Appeals  in  61  Jane
          Street Associates v. CAB, 65 N.Y.2d  898,  493  N.Y.  S.  2d  455

          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

          AK 110251-RO
          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.
          Therefore, although the owner submitted evidence only of  a  rent
          of $245.00 in 1976, this is not a default, and subsequent  lawful
          rents are based on $245.00.  The lawful stabilization rent in the 
          complainant's lease from June 1, 1978 to May 31, 1980 is  $260.44
          per month (June 30, 1977  rent  of  $245.00  increased  by  a  5%
          vacancy allowance and 8 1/2% for a two-year vacancy lease  equals
          $278.08, limited to the $260.44 rent charged); in the lease  from
          June 1, 1980 to May 31, 1982 is $291.00 per month (June 30,  1979
          rent of$260.44 increased by  12%  for  a  two-year  lease  equals
          $291.69, limited to the $291.00 rent charged), and in  the  lease
          from June 1, 1982 to May 31, 1984 is $319.44 per month (September 
          30, 1981 rent of $291.00 +  13%  for  a  two-year  renewal  lease
          equals $328.83, limited to the $319.44 rent charged).  Since  the
          owner charged rents  of  $260.44,  $291.00  and  $319.44  in  the
          complainant's  leases,  there  was   no   overcharge,   and   the
          Administrator's October  31,  1986  order,  as  modified  by  the
          Commissioner's December 29, 1987  order,  finding  an  overcharge
          must therefore be revoked.

          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 is permitted  to  pay  off  the
          arrears in twelve equal monthly installments.  Should the  tenant
          vacate after the issuance of this order, or have already vacated, 
          said arrears shall be payable immediately.

          THEREFORE, in accordance with the Appellate  Division  ruling  in
          JRD, it is

          ORDERED, that this petition for  administrative  review  be,  and
          the same  hereby  is,  granted,  that  the  Rent  Administrator's
          October 31, 1986 order and the Commissioner's December  29,  1987
          order be, and the same hereby are, revoked, and it is found  that
          no rent overcharge occurred.  The lawful  stabilization  rent  is
          $319.44 per month in the lease from June 1, 1982 to May 31, 1984.



          AK 110251-RO
                                          JOSEPH A. D'AGOSTA
                                          Acting Deputy Commissioner



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