Docket No.: ARL 06237-N
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          APPEAL OF                              DOCKET NO.: ARL 06237-N   
                                                 D.R.O.        DOCKET         NO.:
             ARTHUR T. MOTT,                          N-GC-85-S-435-R
                                                 TENANTS: M. & C. Martin   
                                       IN PART

          On December 11, 1985, the  above-named  petitioner-owner  filed  a
          Petition for Administrative Review  against  an  order  issued  on
          December 5, 1985, by the Rent Administrator,  50  Clinton  Street,
          Hempstead, New York, concerning housing  accommodations  known  as
          Apartment  140,  21-31  Brewster  Street,  Glen  Cove,  New  York,
          wherein the Rent Administrator determined that there had  been  an
          overcharge and ordered a refund of $1,119.84.

          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.

          The tenants commenced this proceeding on August 28, 1985 by filing 
          an overcharge complaint, based in part on an  alleged  failure  by
          the owner to provide  a  complete  rental  history.   The  tenants
          alleged their initial rent in August 1985 was $775.00.

          The tenants also alleged that the owner had  told  them  that  the
          Division had approved an electrical conversion  whereby  the  rent
          would be reduced by $20.00 per month and the tenants would pay for 
          their own electricity.  However, at a tenants' association meeting 
          the tenants allegedly learned that  the  owner  had  not  received
          permission for the conversion and that a  Supreme  Court  decision
          then in effect required the owner  to  provide  electricity  as  a
          service included in the rent.  Accordingly,  the  tenants  contend
          that  they  were  fraudulently  coerced  into   signing   a   card
          permitting their separate billing for electricity.

          Finally, the tenants alleged that they had been pressured to  sign
          a blank RA79 MCI form for "any improvements the landlord may  make
          in the future."  However, the tenants refused to do so.

          In a notice dated October 21, 1985, the Administrator  noted  that
          on July 26, 1983 the owner had submitted a rent roll  showing  the
          legal regulated rent for the subject apartment to be $464.83 as of 
          July 20, 1983.  The owner was requested to explain the increase to 
          $775.00 in the complaining tenants' August 1, 1985 lease.

          The owner was further requested to submit the lease in  effect  on

          Docket No.: ARL 06237-N

          July 20, 1983 and all subsequent leases, a  copy  of  the  Initial
          Apartment Registration with proof of service on the tenant then in 
          occupancy,  and  any  documentary  evidence  that  the  owner  had
          complied with Section 48 (now Section 2503.8) of the  Regulations,
          by supplying a copy of the written notice required by that Section 
          justifying the tenants' alleged legal regulated rent of $775.00.

          In answer to the complaint, the owner stated that on November  20,
          1985 he had filed a Petition for Administrative  Review  appealing
          the Administrator's Order Number  GCTC  84-4,  involving  a  prior
          tenant of  the  subject  apartment,  in  which  the  Administrator
          established the March 1, 1984 rent as  $495.04,  rather  than  the
          $700.00 rent actually charged.

          The owner  requested  that  he  not  be  required  to  answer  the
          complaint herein until the pending petition was decided.

          In a letter dated November  26,  1985,  the  tenants  opposed  the
          granting of such an extension, alleging that the  owner's  purpose
          was to delay the proceeding and to harass the tenants.

          In Order Number N-GC-85-S-435-R, issued December 5, 1985, the Rent 
          Administrator noted that the owner had not submitted the requested 
          documentation along with his November  21,  1985  request  for  an
          extension.  The Administrator further noted that Section 2503.8 of 
          the Tenant Protection Regulations requires an owner to  provide  a
          new  tenant  with  written  notice  of  the  prior  rent   and   a
          demonstration of the legality of the vacancy rent  being  charged.
          Section 2503.8 further provides that failure to provide such a 
          notice prevents an owner from  increasing  the  prior  legal  rent
          until such time as the notice is provided.

          The Administrator established the vacancy rent for the complaining 
          tenants as $495.04 (the rent established in GCTC 84-4) plus  a  6%
          Guidelines increase and a vacancy allowance of $41.25 for a  total
          of $565.99.  However, based on the owner's failure to comply  with
          Section  2503.8,  the  Administrator  computed  an  overcharge  of
          $1,119.84, being ($775.00 - $495.04) times 4 months, that is,  the
          Administrator used the  prior  rent  of  $495.04  because  of  the
          owner's failure to comply with Section 2503.8.

          In this petition, the owner contends that the Rent Administrator's 
          Order is incorrect and should be modified because  it  was  issued
          while the owner's petition against  Order  Number  GCTC  84-4  was
          still  pending.   The  owner  also  asserts  that  the   documents
          requested by the Administrator in  the  October  21,  1985  Notice
          [form RN-2(4/85)] had all been submitted by hand to the "Local 

          Docket No.: ARL 06237-N

          Rent Office" on  November  20,  1985  with  the  owner's  petition
          against Order Number GCTC 84-4.

          The owner asserts that the following four  leases  were  submitted
          with his petition against GCTC 84-4:

               Tenant                     Term                Rent
            New World Applications   3/1/81 - 2/29/84       $464.83
            Omar Amos                7/1/84 - 6/30/85       $750.00
            Carole Joel              7/1/85 - 6/30/86       $750.00
            Mark Martin              8/1/85 - 7/31/86       $775.00

          The owner asserts that  these  rents  were  adjusted  to  $495.04,
          $536.29, $622.08 and $686.36,  respectively,  but  did  not  state
          when those adjustments took place.

          The owner further contends  that  the  complaint  in  the  present
          proceeding challenged the Legal Regulated Rent established in  the
          RR-1 (Registration) Form  which  had  not  been  objected  to  (as
          allegedly established in the owner's petition against GCTC  84-4).
          By implication,  the  owner  is  asserting  that  registered  rent
          ($700.00) became the base rent since not timely  objected  to  and
          that Order Number N-GC-85-S-435-R, herein under  appeal,  did  not
          consider that registered rent.

          The owner further argues that N-GC-85-S-435-R should  be  modified
          or revoked pursuant to Regulation 2507.8 which allows such  action
          based on an illegality or irregularity in a vital matter.

          In addition, the owner contends that he had complied with  Section
          2503.8 of the Regulations (which requires, inter alia, notice to a 
          new tenant of the prior tenant's rent).  Attached to this petition 
          is a purported copy of a Notice pursuant to Section 2503.8, signed 
          by the complaining tenants on July 27, 1985, stating their initial 
          rent of $775.00 was preceded by a rent of $814.47  (sic)  pursuant
          to a lease with expiration date in June 1, 1986.

          Finally, the owner states that the  Administrator's  establishment
          of the rent at $569.99 was incorrect due to the failure to include 
          $11.32 for a 2% electrical surcharge, $4.14 for  a  Major  Capital
          Improvement (MCI) increase for a roof, and a  $2.10  MCI  increase
          for a boiler, for a total of $583.55.  The owner  stated  that  he
          would accept no less than  this  amount  while  this  petition  is
          pending.  No documentation of the MCI increases is submitted  with
          the owner's petition.         

          In answer to this petition, the tenants  contend  that  the  order
          should be upheld because a stay pending the decision in GCTC  84-4
          would have enabled the owner to collect  overcharges  which  would
          then be difficult to recover.  To  support  this  allegation,  the
          tenants claim in their August 1987 answer that they vacated the 

          Docket No.: ARL 06237-N

          subject apartment in January  1986  but  are  still  awaiting  the
          return of their security deposit.  In addition, they  allege  that
          in a court proceeding the owner is attempting to collect the money 
          the Division has declared as overcharge.

          Regarding  the  petitioner's  allegation  that  he  complied  with
          Section 2503.8 of the Regulations, the tenants note that the prior 
          rent stated in the Section 2503.8 notice form was  $814.47,  i.e.,
          an amount greater than the complaining tenant's initial  rent  and
          greater than any rent admitted by the owner for any prior  tenant.
          The tenants argue that this form thereby demonstrates the  owner's
          lack of credibility  and  should  not  be  accepted  as  proof  of
          compliance with Section 2503.8.

          The tenants deny ever having been served with the  1985  Apartment
          Registration form  (RR2-A85)  submitted  by  the  owner  with  his
          petition, even though the complaining tenants are  named  on  that

          The Commissioner is of the opinion that this  petition  should  be
          granted in part.

          While it would not have been an error  for  the  Administrator  to
          have waited for the owner's then-pending  petition  against  order
          GCTC 84-4 to be decided, there was clearly no obligation to do so. 
          Having resolved the issue of  rent  and  stabilization  status  in
          order number GCTC 84-4, for  a  prior  tenant,  the  Administrator
          properly determined the lawful  rent  for  the  subsequent  tenant
          based thereon.  The owner's pending appeal of  order  number  GCTC
          84-4 had the effect of staying the owner's  obligation  to  refund
          the collected overcharges determined in that order.  However,  the
          prospective determination of the lawful rent was not stayed and so 
          was in effect at the  time  the  order  herein  under  review  was

          The Commissioner notes that the owner's  appeal  of  order  number
          GCTC 84-4 resulted in two administrative appeal orders, ART (sic)
          06238-N, issued May 28, 1987, and AK 710448-RO, issued October  1,
          1987, in both of which the owner's petition was denied.  That  is,
          order number GCTC 84-4  and  the  rents  established  therein  and
          relied upon by the Administrator in order  number  N-GC-85-S-435-R
          were affirmed.

          The Commissioner further notes that the file  with  docket  number
          GCTC 84-4 does contain a submission by the owner on  November  20,
          1985.  This submission includes some, but not all,  of  the  items
          requested  by  the  Administrator  on  October   21,   1985.    In
          particular, it contains a purported copy of the 1984  registration
          of the subject apartment [form RR-1 (10-83)],  stating  a  $700.00
          rent in April 1, 1984.  However, the submission does  not  include
          the requested proof of service of the RR-1 on the tenant  then  in
          occupancy.  Accordingly, the owner's allegation that the tenant 

          Docket No.: ARL 06237-N

          herein could not challenge the April 1, 1984  registered  rent  is
          without merit.  Furthermore, the  Administrator  in  order  number
          GCTC 84-4 established the March 1, 1984 - February 28, 1985 lawful 
          rent at $495.04 in a proceeding involving the  very  prior  tenant
          named on the 1984 registration form.   Thus,  the  April  1,  1984
          registered rent was successfully challenged by  the  prior  tenant
          and therefore could have  no  binding  effect  on  any  subsequent
          tenant.  As noted above, order GCTC 84-4 has been affirmed by  the
          Commissioner.  Moreover, according to Division records  there  has
          been no appeal of the orders  in  which  the  Commissioner  upheld
          order number GCTC 84-4. 

          Based on the above discussion, the owner's claim to have  complied
          with Section 2503.8 by the alleged filing in 1985 which  stated  a
          prior rent of $814.47 is clearly without merit.

          The Commissioner further finds that the  owner's  contention  that
          the order herein under review should be modified or revoked  based
          on an irregularity in a vital matter is without merit.

          Finally, the  petitioner  has  alleged  that  the  Administrator's
          computation failed to include an electrical surcharge and MCI rent 
          increases for a boiler and a roof.  A search of  Division  records
          reveals that the owner received a $.70 per room rent increase  for
          a new boiler in order number GCLI 84-203/378, issued  January  28,
          1985, and affirmed in ART 02120-N, issued March 24,  1986.   Thus,
          the owner is correct  that  the  August  1,  1985  lease  for  the
          complaining tenant could  contain  a  charge  for  this  increase.
          Division records indicate that  the  apartment  has  three  rooms,
          therefore the Administrator's order is hereby modified to  show  a
          $2.10 MCI increase added  to  the  August  1,  1985  rent.   (Even
          though the owner raised this issue for the first time  on  appeal,
          the Administrator is  deemed  to  have  notice  of  DHCR  orders.)
          Similarly, on November 14, 1984, the owner received  a  $1.38  per
          room increase for a new roof in order number  GCLI  84-15/190  and
          affirmed in ARL 01199-N.  Accordingly, the owner was  entitled  to
          collect $4.14  in  the  August  1,  1985  vacancy  lease  and  the
          Administrator's order is hereby modified to include this increase.

          Regarding the 2% electrical surcharge,  the  owner  is  apparently
          referring to that provided for leases commencing  between  October
          1, 1984 and September 30, 1985  by  the  Nassau  County  Guideline
          Board.  (See Tenant Protection Bulletin  Number  84-2.)   That  2%
          increase, which did "not become part of the legal regulated rent," 
          applies only when the legal regulated rent includes  electric  and
          gas service  and  only  to  "accommodations  contained  in  solely
          residential buildings."  Regardless of the status of  the  subject
          apartment, Division records indicate that the subject building  is
          not solely residential.  Furthermore, the Commissioner notes  that
          Division records also indicate  that  in  1984  the  owner  herein
          converted the subject premises from master metering to  individual


          Docket No.: ARL 06237-N

          metering  of  electricity  without  prior  DHCR  approval,   which
          approval was subsequently obtained.   See  BA-  730471-RO  et  al.
          Therefore the tenants herein were not subject to the 2% surcharge.

          Accordingly,  Administrator's  order  number  N-GC-85-S-435-R   is
          hereby modified to increase the August 1, 1985  -  July  31,  1986
          lawful rent from $565.99 to $572.23 ($565.99  +  $2.10  +  $4.14).
          However, the four month $1,119.84  overcharge  found  therein  was
          based on the prior rent of $495.04 because of the owner's  failure
          to comply  with  Section  2503.8  (formerly  Section  48)  of  the
          Regulations.  Accordingly, the $1,119.84 overcharge found  by  the
          Administrator is not affected by this order.

          This order may, upon the expiration of the  period  in  which  the
          owner may institute a proceeding pursuant to Article seventy-eight 
          of the civil practice law and rules, be filed and enforced by  the
          tenant in the same manner as a judgment.

          The record shows the tenants have vacated the  subject  apartment.
          A copy of this order will be served on the current tenant.

          THEREFORE, in accordance with the Emergency Tenant Protection  Act
          and Regulations, it is

          ORDERED, that this petition be, and the same hereby is, granted in 
          part and the Rent Administrator's order be, and  the  same  hereby
          is, modified in accordance with this Order and Opinion.


                                          ELLIOT SANDER
                                          Deputy Commissioner


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