ARL03517L
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 S.J.R. No.: 774
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.ARL03517L
: DRO DOCKET NO.TA011667
Time Equities, Inc., CTA0224
PETITIONER : TENANT: David Spear
------------------------------------X
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
AND MODIFYING DISTRICT RENT ADMINISTRATOR'S ORDER
On June 3, 1985, the above-named petitioner-owner filed a Petition
for Administrative Review against an order issued on May 1, 1985 by
the Rent Administrator concerning the housing accommodations known
as 221 West 82nd Street, New York, New York, Apartment 7-C wherein
the Rent Administrator determined the fair market rent for the
subject apartment.
Subsequent thereto, the petitioner-owner filed a petition in the
Supreme Court pursuant to Article 78 of the Civil Practice Law and
Rules requesting that the "deemed denial" of the petitioner's
administrative appeal be annulled. The proceeding was then
remitted to the Division for consideration of the petitioner's
administrative appeal.
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 Rent Administrator's order
was warranted.
The applicable sections of the Law are Section 26-513 of the Rent
Stabilization Law and Sections 2521.1(d) and 2522.3 of the current
Rent Stabilization Code.
ARL03517L
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 in October
1983 of a Fair Market Rent Adjustment Application by the tenant.
Such application listed the owner as 82nd Broadway Management
Company. The tenant stated that he took occupancy of the subject
apartment pursuant to a lease which commenced on February 1, 1983
at a rental of $1,500.00 per month.
Subsequently, on September 26, 1984, Time Equities Inc. submitted
a response indicating that it "was the new owner of 221 West 82nd
Street."
In Order Number CTA 0224, the Rent Administrator determined the
initial legal regulated rent by establishing a fair market rent of
$684.97 effective February 1, 1983, the date of commencement of the
initial lease of the tenant herein, directed that all renewal rents
be computed above this initial rent and further directed the owner
to refund total excess rent of $24,256.84 covering the period from
February 1, 1983 through April 30, 1955. The Administrator
determined the fair market rent on the basis of the average of the
special fair market rent guidelines order and the results of the
comparability study. The Administrator in his order listed the
owner as Time Equities, Inc..
In this petition, Time Equities, Inc. alleges in substance that
through a written instrument dated August 27, 1984, Time Equities,
Inc. assumed the burdens and benefits of a net lessee including the
right to collect rents and the obligation to bear all costs
commencing July 1, 1984 and thereafter, while the owner, 82nd
Broadway Management co., remains responsible for obligations
arising prior to July 1, 1984. Therefore, Time Equities, Inc.
urges that the Rent Administrator's order should be modified to
specifically apportion the obligation for refund of excess rent
between 82nd Broadway Management Co. and Time Equities, inc. and
that Time Equities, Inc. should only have to refund that portion of
the excess rent actually collected by it.
In answer to this petition, the tenant contends in substance that
Time Equities, Inc. as the managing agent for 82nd Broadway
Management Co. is responsible for refunding the entire excess rent
amount found against the owner.
The Commissioner is of the opinion that this petition should be
denied, and that the Rent Administrator's order should be modified.
ARL03517L
In a related proceeding, under Docket No. ARL08393L, Time Equities,
Inc. submitted the following documents, which consitute part of the
Division's record:
a) A contract of sale dated June 26, 1984 with 82nd Broadway
Management Co. being listed as the seller and 221 West
82nd Street Equities Group, general partnership c/o
Francis Greenburger, General Partner, 55 Fifth Avenue
being listed as the purchaser and the property being sold
listed as the subject premises herein. In such contract
it was stated that "Time shall be of essence as to
Purchaser's obligation to close and acquire title
hereunder by March 2, 1987" and that "Purchaser or
Purchaser's designee (the "Managing Agent") and Seller
have contemporaneously herewith entered into a management
agreement (the "Management Agreement") whereby Seller has
employed and retained the Managing Agent, between the
date hereof and the earlier of the Closing date, or such
date upon which this contract and/or the Management
Agreement shall have been terminated pursuant to its
terms."
b) A Certificate of Amendment of Certificate of
Incorporation of T.C.C. Productions, Inc. dated July 9,
1969 amending the name of the corporation to Time
Equities, Inc. and listing the President of the
Corporation as Francis Greenburger.
c) Copy of Management Contract dated June 26, 1984 between
82nd Broadway Management Company as owner and Time
Equities, Inc. as agent whereby owner appointed agent as
sole and exclusive renting and managing agent for the
subject premises.
d) Copy of letter dated June 26, 1984 confirming the
parties' understanding of the Contract of Sale and
Management Agreement regarding the subject premises.
Such letter was signed by the general partner of 82nd
Broadway Management Company, the general partner of 221
West 82nd Street Equities Group (Francis Greenburger) and
the President of Time Equities, Inc. (Francis
Greenburger).
e) Copy of Closing Statement for Contract of Sale and
Management Contract for the subject premises dated August
27, 1984.
ARL03517L
f) Copy of a Power of Attorney form dated August 27, 1984
whereby 82nd Broadway Management Co. made Time Equities,
Inc. the Managing Agent of the subject premises pursuant
to Management Agreement dated June 26, 1984.
g) Letter dated December 12, 1986 amending the June 26, 1984
contract of sale of the subject premises changing amount
of purchase price and date of closing.
h) Copy of a deed signed by the Seller dated December 24,
1986 conveying the subject premises from 82nd Broadway
Management Co. to 221-223 West 82nd Owner Co. 55 Fifth
Avenue. c/o Time Equities, Inc.
In proceedings involving fair market rent adjustments, where there
has been a transfer of ownership of a building, the policy of the
former Conciliation and Appeals Board (hereafter CAB) adopted by
the DHCR during the period in question provided that the obligation
of a new owner to refund excess rent was limited to such excess
rent collected by it and could not be extended to excess rent
collected by the prior owner in the absence of evidence of any
collusion between the new owner and prior owner. Pursuant to
Policy Statement 93-1 promulgated August 20, 1993, in fair market
rent appeal cases where there has been a change of ownership, a new
owner is obligated to refund excess rent collected from April 1,
1984. In view of the difficulties encountered by tenants in
locating owners to whom rent payments are no longer made and in
obtaining excess rent payments paid to such owners and in view of
the complicated, entangled owner's history in the proceeding
herein, the Commissioner is of the opinion that if an actual change
of ownership of the premises (transfer of title) has not occurred,
the owner (including a managing agent) currently collecting the
rent is responsible for all refunds of excess rent.
Therefore the question presented in this proceeding is whether an
actual change of ownership of the subject premises occurred as of
July 1, 1984 when Time Equities, Inc. first began collecting rents
at the subject premises. The Commissioner is of the opinion that
no such change of ownership occurred. A careful examination of the
record including the documentary evidence submitted on behalf of
Time Equities, Inc. discloses that although there was a 1984
contract of sale, fee ownership of the subject premises was not
transferred from 82nd Broadway Management Company until at least
December 1986; that from July 1, 1984 to at least December 1986
Time Equities, Inc. acted in the capacity of managing agent for
82nd Broadway Management Company with regard to the subject
ARL03517L
premises and that the period for which the tenant herein was found
to have paid excess rent was from February 1, 1983 through April
30, 1985. The Commissioner finds that Time Equities, Inc. was
acting as the managing agent for the fee owner 82nd Broadway
Management Co. and as such is responsible for refunding to the
tenant herein the full amount of the excess rent collected from
February 1, 1983 through April 30, 1985.
The Rent Administrator's order is hereby amended to reflect that as
regards the tenant herein, Time Equities, Inc. jointly responsible
with 82nd Broadway Management Company for refunding all excess
rent. However, the Commissioner's order and opinion herein is
issued without prejudice to whatever rights, if any, Time Equities,
Inc. has against 82nd Broadway Management Company for the recovery
of that portion of the excess rent to be refunded to the tenant
which was actually collected by 82nd Broadway Management Company-
the excess rent collected prior to July 1, 1984.
CAB Opinion 6629, T/A 9909 issued on March 22, 1984 and cited by
Time Equities, Inc. in its peition, did not consider the question
of whether ownership of 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 increases.
The owner is further directed to roll back the rent to the
stabilized rent consistent with this order and opinion, and to
refund or fully credit against future rents over a period not
exceeding six months from the date of receipt of this order, any
rent paid by the tenant herein in excess of the lawful
stabilization rent.
In the event the owner herein, Time Equities Inc., or the fee
owner, 82nd Broadway Management does not take appropriate action to
comply with this order within 60 days from the date of issuance of
this order, the tenant may credit the excess rent against the next
month(s) rent until fully offset, or may seek to enforce this order
by filing an appropriate action in a court of competent
jurisdiction against either Time Equities, Inc., or 82nd Broadway
Management Corp. or both jointly for the return of the excess rent
of $24,256.84.
ARL03517L
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.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
|
