DOCKET NUMBER: AK 410560-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

     ------------------------------------X 
     IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
     APPEAL OF                              DOCKET NO.: AK 410560-RO
                                         :  
                                            DRO DOCKET NO.: TC 82036-G
       GREENJAY REALTY CO.,
                           PETITIONER    : 
     ------------------------------------X                             

                 ORDER AND OPINION REMANDING PROCEEDING ON APPEAL

     On November 3, 1986, the  above-named  petitioner  filed  a  Petition  for
     Administrative Review against an order issued on September 30, 1986 by the 
     Rent Administrator, 10 Columbus Circle, New York, New York, concerning the 
     housing accommodation known as 117 Bank Street,  Apartment  D,  New  York,
     New York, wherein the Administrator directed the owner to refund $7,617.03 
     in overcharges including interest after April 1, 1984.

     The Commissioner  notes  that  the  District  Rent  Office  Docket  Number
     reflected in the Administrator's order ("TC-82036-R")  is  incorrect,  and
     should have been reflected as TC-82036-G.

     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 issue  in  this  appeal  is  whether  the  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  concerning  the  issues
     raised in the administrative appeal.

     This proceeding was commenced on January  9,  1984  by  the  tenant  (Eric
     Palmer) filing a complaint of rent overcharge with  the  former  New  York
     City Conciliation and Appeals Board.  The tenant  commenced  occupancy  on
     September 1, 1982 without a written lease at an initial rental of $425.00.

     On August 8, 1984, the owner was sent a copy  of  the  tenant's  complaint
     with instructions to file an answer within 20 days, and to  submit  leases
     from the base date as well as to complete a rent history chart.

     On September 4, 1984, the owner responded that, based on  information  and
     belief, the complainant's predecessor, whose monthly rent was $197.50, was 


     subject to rent control, and that the complainant is the first  stabilized
     tenant.  In support, the owner submitted  two  orders  of  the  City  Rent






          DOCKET NUMBER: AK 410560-RO
     Office dated August, 1962 and February, 1971 establishing, as to  a  prior
     tenant   (Lowenstein)   said   to   have    been    succeeded    by    the
     complainants'ecessor, that the apartment was exempt from the rent  control
     law pursuant to Section 13 of the Regulations and was decontrolled  during
     the occupancy of such tenant.  The owner further stated that  due  to  the
     death of the owner corporation's former  principal,  it  is  unknown  what
     steps were taken to provide the complainant with an opportunity for a Fair 
     Market Rent Appeal.

     On July 10, 1986, the Division sent the owner a "Final Notice  of  Pending
     Default" advising that since the rental history for the subject  apartment
     had not been received, the lawful rent would be established  according  to
     the default method authorized by Section 42A of the Code.

     On July 29, 1986, the owner responded by submitting a rent ledger for  the
     period July, 1982 to November, 1982 which, the owner claimed, covered  two
     months prior to, as well as two  months  after,  the  base  rent  date  of
     September 1, 1982.  The owner also submitted, among other things,  a  copy
     of the tenant's renewal lease for the period October 1, 1984 to  September
     30, 1986 which provided for a monthly rent of $463.25.

     In the order issued on September 30, 1986,  the  Administrator  determined
     that the owner had failed to provide a complete  rental  history  for  the
     subject accommodation, and therefore established the legal regulated  rent
     as $263.90 based on the default procedures.  The Administrator  determined
     that a $161.10 per month overcharge occurred during the  tenant's  vacancy
     lease period and that a $137.35 per month overcharge occurred  during  the
     renewal period commencing October 1, 1984.

     In the petition,  the  owner  argues  in,  pertinent  part,  that  it  had
     previously provided a complete rent history, inclusive of the rent  ledger
     which covered the period two months to prior and two months after the base 
     rent date, and resubmits all aforementioned documentation.

     The tenant did not submit on answer to the petition.

     The Commissioner is of the opinion that this proceeding must  be  remanded
     to the Rent Administrator to be processed as  an  application  challenging
     the Initial Legal Regulated Rent ("fair market rent appeal").

     Section 25 of the former Rent Stabilization  Code  provides  in  pertinent
     part that an application to adjust the Initial Legal Regulated Rent on the 
     ground that it exceeds the Fair Market Rent, of a dwelling subject to rent 
     control on June 30, 1974 and vacated thereafter, may be made by the  first
     tenant in occupancy after such first vacancy.  Such  application  must  be
     made within 90 days after receiving the appropriate  notice  (Notice  Form
     DC-2) by certified mail  from  the  owner  informing  the  tenant  of  the
     Initial Legal Regulated Rent and of the right to appeal it.  The right  to
     make this "fair market rent appeal" is limited  to  the  first  tenant  to
     receive the DC-2 notice form by certified mail.

     In the instant case,  the  evidence  in  the  record  indicates  that  the
     complaining tenant was the first rent stabilized  tenant.   As  such,  the
     tenant was entitled to receive the DC-2 notice form.  Since the owner  has
     not submitted any evidence that the tenant was properly  notified  of  his
     right to appeal his initial rent, and since a fair market rent  appeal  is
     the only appropriate application for an initial stabilized tenant to  make
     regarding the  initial  rent,  this  complaint  of  overcharge  should  be
     processed as an application for adjustment of the Initial Legal  Regulated






          DOCKET NUMBER: AK 410560-RO
     Rent.  The owner should be given the  opportunity  to  make  a  submission
     justifying the initial rent.  Such submission may include proof,  if  any,
     that the tenant was properly served a DC-2 notice form and  did  not  file
     his overcharge complaint, or any other fair market rent appeal, within  90
     days of receipt thereof.  The tenant should be  given  an  opportunity  to
     respond, and a new order should then be issued.

     If the owner has already complied with the Administrator's order and there 
     are arrears due to the owner as a result of the instant determination, the 
     tenant shall be 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 Rent Stabilization Law and Code, it is

     ORDERED, that this petition be, and the same hereby  is,  granted  to  the
     extent of remanding this proceeding to the Rent Administrator for  further
     processing in accordance with this order and opinion.

     ISSUED:













                                                                   
                                           ELLIOT SANDER
                                        Deputy Commissioner




                                                   
    

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