AK 410402-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 410402-RO
DISTRICT RENT OFFICE
57 West Associates, DOCKET NO.: L-3111505-R
TENANT: Allen Cohen
PETITIONER PRIOR OWNER: J.M. Rose
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART
On November 6, 1986, the above-named petitioner-owner filed a
Petition for Administrative Review against an order issued on
October 2, 1986, by the Rent Administrator, 10 Columbus Circle,
New York, New York, concerning the housing accommodations known
as 57 West 93rd Street, New York, New York, Apartment No. 4F,
wherein the Rent Administrator determined that the owner had
overcharged the tenant.
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
overcharge 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 Commissioner has reviewed all of the evidence in the record
and has carefully considered that portion of the record relevant
to the issues raised by the administrative appeal.
This proceeding was commenced on March 27, 1984 by the tenant
filing a complaint of rent overcharge with the New York City
Conciliation and Appeals Board (CAB), one of the predecessor
agencies to the Division of Housing and Community Renewal (DHCR).
The tenant commenced occupancy on June 15, 1979 at a monthly
rent of $325.00 pursuant to a two year lease.
On September 18, 1984, the DHCR sent the prior owner a copy of
the tenant's complaint with instructions to file an answer and
complete rent history documentation for the subject apartment
from the base date.
On May 27, 1986, the DHCR sent the attorney for the prior owner a
"Final Notice of Pending Default" whereby the prior owner was
provided a final 20 days to submit documentation to substantiate
the base date for the subject apartment. The prior owner was
advised that its failure to submit rent history documentation
AK 410402-RO
would result in the Division's establishment of the lawful rent
in accordance with the default method authorized by Section 42A
of the Code which involved using the lowest figure established by
any of three methods, one of them being the lowest stabilized
rent for the same size apartment in the building.
In answer to the May 27, 1986 notice, the attorney for the
current owner (the petitioner herein) advised, in pertinent part,
that it took ownership of the subject premises on October 29,
1980 and any overcharges should be apportioned accordingly; that
it had in its possession stabilized leases for the subject
premises dating back only to March 1, 1981 (submitted therewith)
due to the prior owner's failure to pass on prior leases from the
base date; that the Division's 42A default procedure was
arbitrary and constituted an unfair penalty against the owner
because the Division's action in agreeing to consider current
rent rolls, yet choosing the lowest rent in the line, rather than
considering the rents for the entire line, lacked a rational
basis; and that the lawful rent should be determined as the
average of the entire line. The owner further submitted a June
1986 rent roll for the subject premises.
In the order issued on October 2, 1986, the Administrator
determined that the owner had defaulted on its obligation under
Section 42A to submit a complete rent history from the base date
and established the tenant's rent as $246.68 based on the default
procedure using the lowest stabilized rent for the same size
apartment in the building (Apt. 4G), as indicated on the
Division's apartment registration records. Consequently, the
Administrator directed a refund to the tenant of $8,291.19 in
overcharges including interest on overcharges collected on or
after April 1, 1984.
In this petition, the owner, in pertinent part, reasserts that
the Administrator should have considered the entire rent roll and
taken the average, not the lowest, of the rents for the entire
line.
On August 24, 1989, the owner submitted a supplement to its
petition, advising that there are seven lines in the subject
building, A through G; that the "E" line is a mirror image of the
"F" line and the "D" line is similar to the "F" line; and that
the "G" line is not similar to the "F" line and it was therefore
inappropriate for the Administrator to use apartment 4G in
establishing the tenant's rent. The owner also submitted a copy
of the deed showing that it took ownership of the property on
October 29, 1980.
In answer to the petition, the tenant, in pertinent part, urges
affirmation of the order.
The Commissioner is of the opinion that this petition should be
granted in part.
Section 42A of the Rent Stabilization Code requires that an owner
retain complete rent records for each stabilized apartment in
effect from June 30, 1974 to date and produce them to the DHCR
upon demand. If the apartment was decontrolled form the Rent
Control Law after June 30, 1974 the owner must provide
AK 410402-RO
satisfactory documentary evidence of the date of decontrol.
DHCR has adopted a procedure for determining an apartment rent
where an owner does not provide a complete rent history of the
apartment. In such cases the rent is calculated to be the lowest
of the following amounts: 1) the lowest stabilized rent for a
same size apartment in the building; 2) the current tenant's
initial rent minus a guideline and vacancy allowance; 3) the
prior tenant's last rent, if known. While method number 1 as
adopted by the CAB in 1982 was originally based on the lowest
rent in the line, that method has since been modified and is now
based on the lowest rent for a same size apartment in the
building. (Accord: Administrative Review Docket Number BK 410153
RO).
A review of the record in the instant case discloses that the
Administrator properly implemented the default procedure as a
result of the owner's failure to provide a complete rent history.
The Administrator properly established the rent based on the
lowest rent for a same size apartment in the building. It is
noted that the May 27, 1986 default notice to which the owner's
attorney responded indicated that the lowest rent of a same size
apartment in the building would be utilized in the default
procedure.
Although the owner claims that the "G" line apartments are not
similar to the "F" line apartments at the premises, the owner has
submitted no evidence in support of this claim. The owner's
claim is contradicted by the Division's apartment registration
records, upon which the Administrator properly relied, which
indicate that the "G" and "F" lines are both three room units.
In view of the owner's failure to refute the information in the
Division's records, the Commissioner finds that the Administrator
properly utilized the lowest rent figure from apartment 4G.
Section 2526.1 of the current 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 overcharges in the absence of collusion or any
relationship between such owner and any prior owner.
The deed that was provided by the current owner indicates that it
took title to the premises on October 29, 1980. Pursuant to
Section 2526.1(f) of the Code, the former owner is individually
responsible for overcharges collected from June 15, 1979 until
October 28, 1980, or $1291.49; and the current owner-petitioner
is individually responsible for overcharges collected from
October 29, 1980 until August 30, 1986, or $6,999.70 (inclusive
of interest and excess security). The Commissioner notes that
there is no evidence of collusion or any relationship between the
present owner and any prior owners.
Upon the expiration of the period in which the owner may
institute a proceeding pursuant to Article 78 of the Civil
Practice Law and Rules, this order may be filed and enforced in
the same manner as a judgment or, as to the overcharges
attributable to the current owner, not in excess of twenty
percent thereof per month may be offset against any rent
thereafter due the owner.
AK 410402-RO
THEREFORE, in accordance with the provisions of the Rent
Stabilization Law and Code, it is
ORDERED, that this Petition for Administrative Review be, and
the same hereby is, granted in part, and, 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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