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

      APPEALS OF                             DOCKET NO. ARL09611K   
                Lazar Hager
                                          :  DISTRICT RENT OFFICE
                                             DOCKET NO. 494        
                                             TENANT: George Christie         
                            PETITIONER    : 


      On April 22, 1986, the above-named petitioner-owner filed a Petition for 
      Administrative Review against an order issued on March 24, 1986 by the 
      Rent Administrator, 10 Columbus Circle, New York, N.Y. concerning the 
      housing accommodations known as 947 Montgomery Street, apartment B1, 
      Brooklyn, New York wherein the Administrator established the lawful 
      stabilization rent and directed the owner to refund an overcharge of 
      $4227.36 inclusive of excess security and interest on the overcharge 
      occurring on or after April 1, 1984.

      The Commissioner has reviewed all of the evidence of record and has 
      carefully considered that portion of the record relevant to the issue 
      raised in the administrative appeal.  

      This proceeding was commenced on July 17, 1984 when the tenant filed an 
      objection to the initial rent registration. 

      In answer to the complaint, the owner stated that it was unable to 
      provide a rental history because it had purchased the subject building 
      at foreclosure and had received no rent records other than the rent 
      amount and the lease expiration date for each tenant.

      In the order issued on March 24, 1986 the Administrator determined that 
      the owner had defaulted, established the rent at $339.58 as of January 
      1, 1985, and found that an overcharge of $4,227.36 including excess 
      security and interest had been collected.  The overcharge was 
      apportioned and the current owner was found responsible for refunding 

      In its appeal, the owner contends that the Administrator should have 
      taken into consideration the unavailability of a lease history due to 
      the foreclosure.  The owner further contends that the Administrator 
      should have taken the average rents of similar apartments instead of 
      using the lowest rent in the building.

      The tenant contends that the petition should be denied because he was 
      overcharged.  The tenant raises additional issues concerning services in 


      the subject building.  Said issues are not germane to the instant appeal 
      and will not be considered in this order and opinion.

      The Commissioner is of the opinion that this petition should be denied.

      Section 2526.1(f) of the Rent Stabilization Code provides in pertinent 
      part that for overcharge complaints filed on or after April 1, 1984, in 
      the absence of collusion between an owner and any prior owner, where no 
      records sufficient to establish the legal regulated rent were provided 
      at a judicial sale, a current owner who purchases upon such judicial 
      sale shall be liable only for his or her portion of the overcharges, and 
      shall not be liable for treble damages upon such portion resulting from 
      overcharges caused by any prior owner.

      Consistent with the policy of mitigating overcharge penalties imposed on 
      judicial sale purchasers which underlines this portion of Code Section 
      2526.1(f) and in consideration of court rulings directing DHCR to modify 
      default procedures, the DHCR has adopted a new policy with respect to 
      the processing of overcharge cases involving judicial sale purchasers.  
      Where rent records are not available upon judicial sale, DHCR will 
      establish the legal regulated rent as the average of: a) the lowest rent 
      in the building for an apartment with the same number of registered 
      rooms; b) the complaining tenant's initial rent, minus the guidelines; 
      and c) the prior tenant's rent, if known.  The legal regulated terms 
      rent so established is to be frozen for three years or two leases, 
      whichever is greater, starting with the commencement date of the 
      complaining tenant's initial lease.

      Although this policy addresses the contentions raised by the owner in 
      its appeal, any benefit to be derived from application of the new policy 
      to the instant proceeding is negated by computational errors in the 
      Administrator's order.  Such errors include an erroneous setting of the 
      initial default rent and a failure to freeze the rent during the 
      overcharge period-errors which helped the owner.  Since the tenant did 
      not file his own appeal, these errors will not be corrected.  
      Accordingly, the Commissioner declines to apply the new policy to this 

      The Commissioner has determined in this Order and Opinion that the 
      current owner collected overcharges of $2489.47.  This Order may, upon 
      expiration of the period for seeking review of this Order and opinion 
      pursuant to Article Seventy-eight of the Civil Practice Law and Rules, 
      be filed and enforced as a judgment or not in excess of twenty percent 
      per month of the overcharge may be offset against any rent thereafter 
      due the owner.  Where the tenant credits the overcharge, the tenant may 
      add to the overcharge, or where the tenant files this Order as a 
      judgment, the county Clerk may add to the overcharge, interest at the 
      rate payable on a judgment pursuant to section 5004 of the Civil 
      Practice Law and Rules form the issuance date of the Rent 
      Administrator's Order to the issuance date of the Commissioner's Order.

      THEREFORE, in accordance with the provisions of 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, affirmed.


                                      JOSEPH A. D'AGOSTA
                                      Acting Deputy Commissioner


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