AL 110604 RO
STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
----------------------------------X S.J.R. 6028
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: AL 110604 RO
DRO DOCKET NO.: Q-3119496-T
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
AFTER COURT REMIT
On December 22, 1986 the above-named owner filed a petition for
administrative review of an order issued on November 18, 1986, by
a District Rent Administrator concerning the housing
accommodations known as Apartment 3-B, 83-43 118th Street, Kew
Gardens, New York, wherein the Administrator determined that the
tenant had been overcharged in the amount of $20,219.20,
including excess security and interest on overcharges incurred
after April 1, 1984.
On August 30, 1991, the Commissioner issued an order and opinion
denying the owner's opinion.
Subsequently, the owner sought judicial review in the Supreme
Court of the State of New York pursuant to Article 78 of the
Civil Practice Law and Rules.
Incorporating a stipulation of settlement between the parties,
the Court (Hon. J. Rutledge, Queens County) issued an order on
January 21, 1992 remitting the proceeding to the New York State
Division of Housing and Community Renewal for a final order in
accordance with the decision in the case of JRD v Eimicke.
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 originally commenced by the filing of a rent
overcharge complaint by the tenant on March 26, 1984. The tenant
originally took occupancy pursuant to a two-year vacancy lease
commencing on August 1, 1977 and expiring on July 31, 1979 at a
monthly rent of $350.00.
A copy of the complaint was served upon the owner along with a
notice advising the owner that the complaint was in reference to
a fair market rent appeal and rent overcharges.
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In Order No. 26,955, issued on November 18, 1986 the Rent
Administrator determined that, although the tenant was ineligible
for a Fair Market Rent Appeal, overcharges were still found that
were entirely due to an excessive initial rent. It was noted
that the prior tenant had paid a rent of $167.70, and that the
owner's claim that this amount was "artificially low" because the
tenant was related to the prior owner, was rejected. Subsequent
overcharges were then calculated as based on the correct
guidelines increases for the tenant's next three lease terms,
resulting in total overcharges of $20,219.20, including accrued
interest since April 1, 1984, and excess security.
In its petition, the owner argues that contrary to the stated
intention of the order, the Administrator had "merely paid lip
service" to the equities involved in determining that the
complainant's initial rent of $350.00 was not excessive.
The Commissioner is of the opinion that this petition should be
granted in accordance with the court directive in this case.
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) to date and to produce
such records to the DHCR upon demand.
Section 26-516 of 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
produce rent records for more than 4 years prior to the most
recent registration, and concomitantly, established a 4 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 right 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 4 years prior to April
1, 1984 of their 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. Mgt. v.
Eimicke, 148 A.D.2d 610, 539 N.Y.S.2d 667 (App. Div. 2d Dep't
1989), motion for leave to reargue or for leave to appeal to the
Court of Appeals denied (App. Div. 2d Dep't, N.Y.L.J., June 28,
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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 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 4 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 Dep't 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.
Accordingly, on the chart attached hereto and made a part hereof,
the Commissioner has computed the stabilized rent from April 1,
1980, when the subject tenant was in occupancy. These
computations show that no overcharges was collected.
If the owner has already complied with the District Rent
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 (24) equal monthly
installments. Should the tenant vacate after the issuance of
this order or have already vacated, said arrears shall be payable
THEREFORE, in accordance with the decision in the JRD case and
the court order in this case, it is
ORDERED, that this petition be, and the same hereby is, granted;
and that the Administrator's order be, and the same hereby is,
revoked and it is determined that the tenant was not overcharged.
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner