STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
------------------------------------X SJR 505
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. ARL01284L
: DISTRICT RENT OFFICE
Time Equities, Inc., DOCKET NOS. CDR00625
TENANT: Donald Siegal
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
AND MODIFYING DISTRICT RENT ADMINISTRATOR'S ORDER
On October 3, 1984, the above-named petitioner-owner filed a Petition
for Administrative Review against an order issued on August 31, 1984, by
the District Rent Administrator, 10 Columbus Circle, New York, New York,
concerning the housing accommodations known as 35 West 90th Street,
New York, New York, Apartment No. 10C, wherein the District Rent
Administrator determined that the owner had overcharged the tenant. On
March 26, 1985 the Commissioner denied the owner's appeal of such order.
Subsequent thereto, the petitioner-owner filed a petition and order to
show cause in the Supreme Court pursuant to Article 78 of the Civil
Practice Law and Rules requesting that the denial of the petitioner's
administrative appeal be annulled. The proceeding was then remitted to
the Division for reconsideration of the petitioner's administrative
appeal and the issuance of an amended order.
The Commissioner notes that this proceeding was filed 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 herein is whether the Rent Administrator's order was
The applicable sections of the Law are Section 26-516 of the Rent
Stabilization Law, Sections 2526.1 of the current Rent Stabilization
Code and Sections 10B, 11 and 20A of the former Rent Stabilization Code.
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.
The tenant originally commenced this proceeding by filing a complaint of
rent overcharge on November 9, 1982 with the former New York City
Conciliation and Appeals Board (CAB) which was based on CAB Opinion 9612
wherein the Board established the prior tenant's rent at $519.13. The
tenant alleged that based thereon, the tenant's initial rental on April
1, 1981 of $1350.00 was an overcharge.
In April, 1983 the tenant advised the staff of the CAB that he and Time
Equities Inc. reached a settlement based partly on the owner's Naima
Saleh's and Time Equities, Inc.,'s representations that title to the
subject building was transferred to Time Equities, Inc. from Naima Saleh
on November 1, 1982. However, in September 1983, the tenant requested
that the CAB reopen his complaint because in August 1983 upon a review
of a co-op plan, he learned that Naima Saleh still held title to the
In its response, Time Equities Inc. alleged that it became the net
lessee of the building on November 1, 1982; that it did not possess any
monies from the tenant to which it was not entitled; and that it had
settled the tenant's dispute with it. In addition, Time Equities Inc.
contended that since the definition of an "owner" under the Rent
Stabilization Law was not limited to the title holder but included other
parties who were entitled to collect rent, Time Equities became the
owner of the building on November 1, 1982 when it began receiving rent.
A check of the enrollment records of the Rent Stabilization Association
showed that Time Equities, Inc. was listed as the agent of the subject
premises and "Francis Greenburger, net lessee" was listed as the owner
of the subject premises. Additionally, the records of the CAB showed
that Time Equities, Inc. had submitted a copy of the net lease to the
CAB during the course of another CAB proceeding (T/A Docket Number
10010). The lease provided that Naima Saleh leased the subject premises
to Francis Greenburger, for a term of three years. In an amended
Certificate of Incorporation dated July 9, 1969, Francis Greenburger is
listed as the President of Time Equities, Inc.
In Order Number CDR00625 issued August 31, 1984, the District Rent
Administrator found an overcharge in the sum of $13,912.56 for the
period from April 1, 1981 through October 31, 1982 and directed Time
Equities, Inc. as agent for Naima Saleh to immediately refund this
overcharge based on its misleading the tenant into believing that there
had been a change in ownership and into closing his case, thereby
causing delay in the refund of the overcharge and based on Naima Saleh,
the fee title owner's failure to comply with the directives in CAB
Opinion Number 9612 which included a directive to roll back the rent to
the stabilized amount. The District Rent Administrator further found
that there was no overcharge from November 1, 1982 to March 31, 1983 as
Time Equities, Inc. had already refunded to the tenants $4,392.44
covering the period from November 1, 1982 to March 31, 1983.
In its petition, Time Equities, Inc., by it attorney contends that it
has already refunded to the tenant a total of $12,817.44 which amount
includes a refund pursuant to a previous settlement wherein it refunded
to the tenant $4,392.44 for rent payments covering the period November
1, 1982 to March 31, 1983; and $8,425.00 paid to the tenant as
settlement of any dispute concerning rent monies collected during the
term of the tenancy, from April 1, 1981 to March 31, 1983. However the
record including a copy of the general release signed by the tenant
discloses that the tenant actually received $8250 for this period of
overcharges rather than the $8425 stated by the petitioner. As to the
remaining $1,095.12 still owed, the petitioner asserts, it cannot be
compelled to refund these monies because the tenant executed a general
release subsequent to the issuance of CDR Order 00625; an that this
general release was a binding settlement of all disputes regarding rent
paid under the tenancy.
Time Equities, Inc., in its petition, also contends that prior to
November 1, 1982 it had no proprietary interest in the subject building,
that it did not act as a managing agent for the owner, and that the
tenant paid all rent to Naima Saleh and therefore Time Equities, Inc.
should not have been ordered to refund that portion of the overcharge
which it never collected from the tenant.
It further contends that since November 1, 1982, it clearly came within
the definition of "owner" under Section 2h of the former Rent
Stabilization Code since it assumed all the obligations of the prior
owner and collected all rents for the subject building and that
therefore based on Section 2h, it has in fact been the owner of the
subject premises since November 1, 1982 and therefore should only be
responsible for those overcharges occurring on and subsequent to its
date of ownership.
In its petition Time Equities, Inc. further contends that the District
Rent Administrator's direction that the petitioner refund disputed rent
monies for the period prior to petitioner's entering into its net lease
agreement, is at variance with CAB Opinion 6629 wherein the CAB directed
Time Equities Inc. to refund only those monies dating back to the date
it acquired a proprietary interest in the subject building, namely
November 1, 1982. The prior owner in that case was directed to refund
the balance of the overpayment up to November 1, 1982.
The petitioner concludes that based upon all of the above grounds there
was no basis for the District Rent Administrator to diverge from the
established rule that the obligation of a new owner is limited to
refunding excess rent actually collected by it; and that requiring the
petitioner to refund monies collected by the prior owner was a drastic
penalty based upon an alleged misrepresentation by the petitioner to the
tenant which never took place.
In his answer to the petition, the tenant asserts that based on his
calculations regarding the amount of overcharge he incurred, the amount
still owed him is $912.56 and not $1,095.12 as stated in the petition.
The tenant further asserts that he believes this amount should be
refunded to him because of misrepresentations made by the fee owner and
Time Equities, Inc.
The Commissioner is of the opinion that this petition should be denied
and that the District Rent Administrator's order should be modified.
In proceedings involving rent overcharge complaints for overcharges
collected prior to April 1, 1984, the policy of the CAB adopted by the
DHCR provides that the obligation of a new owner to refund rent
overcharges is limited to such rent overcharges collected by it and may
not be extended to rent overcharges collected by the prior owner in the
absence of evidence of any collusion between the new owner and prior
owner. However Section 2526.1(f)(2) of the current Rent Stabilization
Code provides in pertinent part that for rent overcharges collected on
or after April 1, 1984, a current owner shall be responsible for all
overcharge penalties including penalties based upon overcharges
collected by any prior owner.
In view of the difficulties encountered by tenants in locating owners to
whom rent payments are no longer made and in obtaining rent overcharges
paid to such owners; in view of the change in policy to hold current
owners liable for all overcharges collected on or after April 1, 1984;
and in view of the complicated, entangled owner history in the
proceeding herein, the Commissioner is of the opinion that in this case
the policy for rent overcharges collected prior to April 1, 1984 of
limiting the obligation of a new owner to refund only overcharges
actually collected by it must be strictly construed and applied only if
an actual change of ownership of the premises (transfer of title) has
occurred. Otherwise the owner currently collecting the rent is
responsible for refunding all rent overcharges.
In the instant case, the evidence of record discloses no change of
ownership during the period of the rent overcharge (from April 1, 1981
through March 31, 1983). Naima Saleh remained the fee owner during this
entire period and Time Equities, Inc. began collecting rents at the
subject premises as of November 1, 1982. Accordingly Time Equities,
Inc. was properly directed by the District Rent Administrator to refund
the full amount of the rent overcharges from April 1, 1981 through March
31, 1983. The record further discloses that although the tenant's lease
during the period from April 1, 1981 to October 31, 1982 stated that the
rent was $1350.00 per month, the tenant actually paid $1100 per month
during such period. Accordingly, the total overcharge for the period
from April 1, 1982 to October 31 1982 should have been listed by the
Rent Administrator as $9162.56 rather than $13,912.56. Since Time
Equities, Inc. has already refunded $8250.00 in overcharges for the
period from April 1, 1981 to October 31, 1982, it still owes $912.56.
Accordingly, the Rent Administrator's order must be modified to show a
rent overcharge of $9,162.56 rather than $13,912.56 for the period from
April 1, 1981 to October 31, 1982 and to note that Time Equities, Inc.
has refunded $8250.00 of this amount and still owes $912.56.
This order is issued without prejudice to whatever rights, if any, Time
Equities, Inc. has against the fee owner Naima Saleh for the recovery of
that portion of the overcharge refunded by Time Equities, Inc to the
tenant which was actually collected by Naima Saleh.
With regard to the settlement signed by the parties on September 12,
1984, the Commissioner finds that such settlement did not act as a
general release of all disputes regarding rent paid under the tenancy
since pursuant to Section 11 of the former Rent Stabilization Code an
agreement by a tenant to waive the benefit of any provision of the Rent
Stabilization Law or Code shall be void.
CAB Opinion 6629, T/A9909 issued on March 22, 1984 and cited by Time
Equities, Inc. in its petition, did not consider the question of whether
ownership in the subject premises had changed when Time Equities, Inc.
first began collecting rent.
The owner is directed to reflect the findings and determinations made in
this order on all future registration statements, including those for
the current year if not already filed, citing this order as the basis
for the change. Registration statements already on file, however,
should not be amended to reflect the findings and determinations made in
this order. The owner is further directed to adjust subsequent rents to
an amount no greater than that determined by this order plus any lawful
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,
not in excess of twenty percent per month thereof of the remaining
overcharge may be offset against any rent thereafter due the owner.
THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
ORDERED, that this petition be, and the same hereby is, denied, and the
Rent Administrator's order be, and the same hereby is, modified in
accordance with this order and opinion and that the Commissioner's prior
Order and Opinion issued on March 26, 1985 be, and the same hereby is,
affirmed as modified herein.
JOSEPH A. D'AGOSTA