STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEALS OF DOCKET NO. ARL09611K
: DISTRICT RENT OFFICE
DOCKET NO. 494
TENANT: George Christie
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
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