AK 110260-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. AK 110260-RO
: DRO DOCKET NO. Q 3120805-R
Aris Realty Corp.,
TENANT: Gerard Mullarkey
PETITIONER :
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART
On November 19, 1986, the above-named petitioner-owner filed a Petition
for Administrative Review against an order issued on October 20, 1986,
by the Rent Administrator concerning the housing accommodations known as
33-54 83rd Street, Jackson Heights, New York, Apartment No. H-32 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 on March 27, 1984
of a rent overcharge complaint by the tenant.
In answer to the tenant's complaint, the owner stated in substance that
the apartment had been "completely renovated "prior to the occupancy of
the complainant, and included copies of a bill and cancelled check to
the contractor. The owner submitted a rental history dating from July
1, 1975.
In Order Number Q-3120805-R, the Rent Administrator determined that the
tenant had been overcharged in the amount of $16,724.57, including
excess security and interest on overcharges since April 1, 1984. The
Administrator's calculations showed that overcharges commenced in the
one year lease term commencing on December 1, 1978 for a prior tenant
and continued in each lease thereafter. The order did not include any
increase for apartment improvements.
Annexed to the petition is an affidavit from the president of the
corporate owner wherein he affirms that there was no overcharge and
contends that the Administrator's order was in error. Specifically,
petitioner contends that the order failed to reflect the installation
AK 110260-RO
and cost of the improvements totalling $8,700.00 made in the apartment
before the subject tenants' commencement of occupancy, and that the
order incorrectly listed the subject tenants' lease rent for the period
from October 1,1983 to September 30, 1985 at $975.00 rather that
$650.00. Finally, petitioner contends that the first stabilized tenant,
Mr. and Mrs. Zulic, who assumed occupancy on July 1, 1972, were given an
artificially low rent because of a special relationship. The owner
includes its own rent calculation chart with the petition.
By letter filed on April 4, 1988, the tenant confirms the owner's
statement that his rent for the period from October 1, 1983 September
30, 1985 was $650.00 rather than $975.00.
After careful consideration, 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 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
AK 110260-RO
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.
The Commissioner notes that the issues raised in the petition regarding
the allegedly reduced rents for petitioner's "relatives" need not be
addressed since they concern events which occurred prior to the base
date of April 1, 1980, and thus have no bearing on the lawful rent. The
Commissioner finds, however, that the Administrator failed to consider
the owner's documented claim for new equipment that was installed at the
time the complainant assumed occupancy. Although about half of the
items do not qualify for an increase because they constitute maintenance
and repair, the owner establishes eligibility for an increase for
kitchen renovations totalling $3,150.00. However, the increase will be
limited to 1/40th of $2,500.00 ($62.50 per month), since this lesser
amount was stated on a rider to the tenant's lease as the amount charged
for improvements.
The owner's own rent chart is also incorrect because it improperly
includes a fuel increase, granted under Guidelines 10, in the base rent
in calculating the rent for the lease term commencing on May 1, 1980.
The original rent, $319.80, is the amount listed on the lease as
security; the lease was manually altered to show a rent of $345.65,
without an explanatory note.
Furthermore, the owner is ineligible for the guidelines and vacancy
allowance increases in the lease commencing on August 1, 1981 because
the prior lease began only three months earlier, on May 1, 1981. It is
the Division policy that a lease rent in effect for three months or less
cannot be used to support a rent increase (Accord: AK 410186-RO).
However, a review of the record confirms the owner's contention that the
Administrator incorrectly found the subject tenants' initial rent to be
$975.00 rather than $650.00. The $975.00 figure was actually the
tenant's security deposit, not the rent.
A recalculation of the lawful rent since April 1, 1980 results in a
reduction of overcharges to $4,672.96, from $16,724.57, as documented in
a rent calculation chart affixed hereto and made a part hereof.
This order may, upon the expiration of the period in which the owner may
institute a proceeding pursuant to Article Seventy-Eight of the Civil
Practice Law and Rules, be filed and enforced by the tenant in the same
manner as a judgment or not in excess of twenty percent thereof per
AK 110260-RO
month may be offset against any rent thereafter due the owner.
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 24
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 in part, and that the order of the Rent Administrator
be, and the same hereby is, modified in accordance with this order and
opinion.
ISSUED:
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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