STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: AL 210081 RO
Fitzroy Honore, DRO DOCKET NO.: K 3104418-R
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
On December 1, 1986, the above-named petitioner-owner filed a Petition
for Administrative Review against an order issued on October 27, 1986
by the Rent Administrator concerning the housing accommodations known as
783 Sterling Place, Brooklyn, New York, Apartment No. 1L, 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
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 of a rent
overcharge complaint by the tenant with the New York City Conciliation
and Appeals Board, one of the predecessor agencies to the Division of
Housing and Community Renewal. The tenant took occupancy on a month-to-
month basis on November 1, 1979.
In answer to the tenant's complaint, the owner stated in substance that
no leases had been given to any tenant prior to his purchasing the
building in September, 1981, and submitted a rental history from
November 1, 1979.
On October 27, 1986 under Order no. CDR 25,236 the Rent Administrator
determined that, due to the owner's failure to submit a complete rental
history, the tenant had been overcharged in the amount of $1,207.50, and
directed the owner to refund such overcharge to the tenant.
In its petition for administrative review, the owner alleges, among
other things, that the tenant did not complain of overcharge, but only
of the owner's failure to pay interest on security, and thus due process
was denied when an overcharge was found; that he was responsible only
for overcharges he collected from the time he purchased the building in
September 1981; that he could have presented additional evidence if he
knew that overcharges would be computed on a period after the date of
the tenant's filing of the complaint; that the Administrator erroneously
calculated the lease period for the lease commencing July 1, 1983 as
three, rather than two, years; and that the default formula utilized by
the Administrator was arbitrary.
In response to the petition, the tenant alleges, among other things,
that the owner on several occasions attempted to evict her following her
filing of the overcharge complaint.
The Commissioner is of the opinion that this 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
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
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
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. Since the record contains a complete
rental history from November, 1979, undisputed by the owner, the owner
cannot be held to have defaulted under the Rent Stabilization Code.
Section 2522.5 of the current Rent Stabilization Code provides, in
pertinent part, that failure to provide a fully executed renewal lease
to a tenant shall result in denial of any rent guideline increases for
that unit to the owner, until such renewal lease is provided.
The tenant has stated, and the owner has not denied, that on November 1,
1980, the owner increased the monthly rent to $220.00. That increase is
in contravention of the above, since the owner did not provide the
tenant with a written lease or lease extension agreement. Accordingly,
that increase is null and void.
That void increase was incorporated into every lease agreement since
March 1, 1982. In addition, the Commissioner notes that the
Administrator erred in calculating the period of the lease commencing
July 1, 1983 as three, rather than two years. That error has been
corrected in the rent calculation chart attached hereto. The resultant
overcharge is $817.28, including interest on overcharges collected on or
after April 1, 1984 and excess security.
Concerning the owner's allegation of denial of due process, the
Commissioner finds such allegation to be without substance, since the
tenant's complaint, which includes a reference to the owner's failure to
provide the tenant with a section 42A rider, clearly evinces that the
tenant did not intend to limit her complaint to the failure of the owner
to provide interest on her security deposit but also intended to
question the lawfulness of her rent.
With regard to the owner's contention that he is not responsible for
overcharges collected prior to his purchase of the premises, the
Commissioner notes that the owner herein purchased the subject apartment
on September 25, 1981, after part of the overcharge had occurred.
Pursuant to Section 2526.1(f)(1) of the Rent Stabilization Code, for
overcharges collected prior to April 1, 1984, in the absence of any
collusion between the present owner and the former owner, the present
owner's obligation to refund excess rent is limited to the amounts
actually collected by it. Accordingly, the current owner is obligated
to refund only that portion of the overcharge which occurred since
October 1, 1981, or $675.14 plus $19.90 in interest and $12.24 in excess
security, for a total of $707.28. Computation of the overcharges, the
interest, and their apportionment are shown on the rent calculation
chart attached hereto and made a part hereof.
The Commissioner notes that the prior owner was not served with copies
of the tenant's complaint or the Administrator's order, and was not
named in the Administrator's order. Therefore no directive to the prior
owner to refund overcharges to the tenant is included in this order.
This order is issued without prejudice to the tenant's rights, if any,
to proceed against the prior owner in a court of competent jurisdiction.
THEREFORE, in accordance with the Appellate Division ruling in JRD, it
ORDERED, that this petition for administrative review be, and the same
hereby is, granted in part, that the order of the Rent Administrator be,
and the same hereby is, modified in accordance with this order and
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner