AL 210081-RO

                                STATE OF NEW YORK
                          OFFICE OF RENT ADMINISTRATION
                                   GERTZ PLAZA
                             92-31 UNION HALL STREET
                             JAMAICA, NEW YORK 11433

      APPEAL OF                              DOCKET NO.: AL 210081 RO

           Fitzroy Honore,                   DRO DOCKET NO.: K 3104418-R

                                             TENANT: Johnson                  

                                     IN PART

      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 

          AL 210081-RO

      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 
      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 

      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 
      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.

          AL 210081-RO

      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.

          AL 210081-RO

      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


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