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   ADMINISTRATIVE REVIEW
          IN THE MATTER OF THE ADMINISTRATIVE :   DOCKET NO.: ARL 10384-K
          APPEAL OF                           :   D.R.O. ORDER NO.
               200 CLINTON REALTY CORP.,      :             CDR 15,575
                                 PETITIONER   :   TENANT: CARYN BERNSTEIN
          ------------------------------------X


                       ORDER AND OPINION GRANTING PETITION FOR
                            ADMINISTRATIVE REVIEW IN PART


          On May 16, 1986, the above named petitioner-owner filed a Petition 
          for Administrative Review against an order issued on April 24, 
          1986, by the Rent Administrator, 10 Columbus Circle, New York, New 
          York, concerning housing accommodations known as Apartment 4-N, 200 
          Clinton Street, Brooklyn, New York, wherein the Rent Administrator 
          determined that the initial stabilized rent exceeded the fair 
          market rent and ordered a refund of $6498.13 in excess rent, 
          including excess security.

          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 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 tenant commenced this proceeding on March 21, 1984 by filing a 
          Fair Market Rent Appeal (FMRA) with the New York City Conciliation 
          and Appeals Board (CAB), the agency formerly charged with enforcing 
          the Rent Stabilization Law.



















          DOC. NO.: ARL 10384-K
          On January 22, 1986 the tenant informed the Administrator that the 
          building had been sold by Hulldun Capital Ltd. to W & G Ltd on July 
          2, 1984 but that the managing agent remained Marlboro Realty 
          Associates.

          The then-new owner was served by the DHCR with the tenant's FMRA on 
          March 3, 1986.  There is no indication in the record that either of 
          these owners or their managing agent submitted an answer to the 
          tenant's application.  (However, on appeal the current owner 
          submitted a copy of a letter with attachments dated March 21, 1986 
          which the managing agent allegedly sent to the CAB as well as a 
          purported answer by Hilldun Capital Limited dated October 2, 1984.)

          In Order Number CDR 15,575, the Rent Administrator determined that 
          the Initial Legal Regulated Rent should be adjusted from the 
          $333.50 charged to $198.74 effective June 15, 1982.  The 
          Administrator found that the owners had not submitted the necessary 
          data regarding comparable apartments and determined the fair market 
          rent on the 1980 MBR of $165.62 plus 20% pursuant to Special 
          Guidelines Order Number Thirteen.  The prior owner, Hilldun Capital 
          Limited was directed to refund excess rent collected from June 15, 
          1982 to May 31, 1985.  The then-current owner, W & G Limited was 
          directed to refund any excess rent which it collected.  The 
          Administrator noted that in the absence of evidence of collusion 
          between those two owners, each was obligated to refund only the 
          excess rent which it actually collected.

          In this petition, the current owner contends that the Rent 
          Administrator's Order is incorrect and should be modified because 
          in a letter dated April 8, 1986 it informed the Administrator that 
          it had acquired the subject building on April 2, 1986 and requested 
          an extension of two weeks in which to answer the tenant's 
          complaint.  This was received by the Division on April 10, 1986 
          "well before the issuance of the order."  In addition, on April 25, 
          1986, one day after the issuance of the order, a "Supplemental 
          Answer" was hand-delivered to the Division.  Furthermore, the prior 
          owner and managing agent had allegedly answered the complaint.  A 
          purported copy of that answer without enclosures is attached to the 
          owner's petition.  The attached document, dated October 2, 1984, 
          states the tenant was the first stabilized tenant and that in 
          addition to the fair market rent the prior owner had supplied a new 
          kitchen sink, a new refrigerator and new venetian blinds, implying 
          that a rent increase was taken for those items.  The answer also 
          states that the initial registration form R-R-1 and the Landlord's 
          Report of Statutory Decontrol are attached.  Accordingly the 
          petitioner contends the Administrator's order is "clearly 
          arbitrary, capricious and unreasonable" because it was "predicated






          on the erroneous belief that the owner and managing agent has 






          DOC. NO.: ARL 10384-K

          failed to respond to the tenant's application."  In addition, the 
          petitioner argues that it was error not to consider the appliances 
          installed, which were indicated in the tenant's own application.

          In answer to this petition, the tenant contends that the order 
          should be upheld because none of the owners has submitted 
          documentation to prove the fair market rent or rental history of
          the subject apartment.  Since the two prior owners failed to appeal 
          the order, it must at least be affirmed as to them.  The petitioner 
          is alleged to have acquired the building on April 21, 1986.  
          Furthermore, both prior owners are alleged to have used the same 
          managing agent.  The tenant asserts that the 1972-73 MBR was 
          $104.35 and contends that the answer of the prior owner, submitted 
          by the new owner on appeal, contains no "data that would support 
          the petitioner's objection to DHCR's order."  The tenant did not 
          comment on the owner's allegations regarding improvements to the 
          apartment.

          On November 1, 1990 the petitioner was asked to submit the Schedule 
          B referred to in its April 25, 1986 answer and any and all proof of 
          any rent increase which was based on improvements to the subject 
          apartment.

          In a response dated November 29, 1990, the petitioner submitted (1) 
          a copy of its April 23, 1986 letter to the Division, hand-delivered 
          on the same date, referring to an "enclosed" supplemental answer 
          from the petitioner; (2) a supplemental answer which was hand- 
          delivered to the DHCR on April 25, 1986; and (3) a copy of a March 
          21, 1986 letter from the prior managing agent to the CAB, stating 
          a 1982 MBR of $190.58 and alleging $750.61 worth of improvements 
          for which a $18.77 rent increase was taken.  A Schedule B is also 
          attached alleging expenditures of $305.00, $277.98 and $167.63 for 
          a refrigerator, stove and sink-countertop, all allegedly installed 
          in June of 1982.  In addition there are invoices for the first two 
          of these amounts and a memorandum from the owner stating that 
          $167.63 was paid to a named individual to construct a kitchen sink 
          and cabinet, plus cash invoices for $59.17 and $58.46 for the 
          materials and a notation indicating that the latter two figures
          plus $40.00 in labor and $10.00 for "gas," totalling $167.63 would 
          be paid to "Joe Enright Supplies."  Finally there are three checks 
          showing payment of $1928.99 to the supplier of the stove, $1540.00 
          to the supplier of the refrigerator, and $167.63 to Joseph Enright.

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



          At the outset, it must be noted that the Administrator's order did 
          not state that the owners had failed to respond at all, but
          rather that they had failed to submit the requested data regarding 
          comparable rents, so that the Administrator was constrained to base 












          DOC. NO.: ARL 10384-K

          the computation solely on the MBR and the Special Guidelines for 
          FMRA's.  On appeal the petitioner has neither submitted such data 
          nor proved that it had been submitted below.  The alleged 
          submission to the CAB on March 21, 1986 did not reach the DHCR 
          until this appeal.  A submission to the CAB in 1986 in response to 
          a 1986 service by the DHCR on the then-new owner, does not 
          constitute a submission to the DHCR.   Nor did the purported 
          October 2, 1984 answer contain such data.

          On the other hand, it is undisputed that certain improvements were 
          made to the subject apartment just prior to or contemporaneous with 
          the complaining tenant's initial occupancy and the Administrator 
          had notice of those improvements.  Indeed, the tenant mentioned 
          three "appliances" having been put into her apartment in her 
          original complaint and estimated the monthly rent increase based 
          thereon to have been $15.00.  The owner has demonstrated that the 
          correct figure was $18.77.  Accordingly, the initial fair market 
          rent established by the Administrator must be raised by $18.77 to 
          $217.51 so that the tenant's initial rent of $333.50 exceeded the 
          fair market rent by $115.99, rather than the $134.76 found by the 
          Administrator.   Therefore, the excess rent for the June 15, 1982 - 
           May 31, 1985 lease term was $4117.65 rather than the $4,783.98 
          found by the Administrator.  Increasing the $217.51 by 6% pursuant 
          to Guidelines Order Sixteen yields a stabilized rent of $230.56 for 
          the June 1, 1985-May 31, 1986 lease, for an excess rent of [$353.51 
          - $230.56] x 11 = $1352.45 through April 30, 1986, the computation 
          date of the Administrator's order.  Thus the total excess rent 
          collected through April 30, 1986 was $5470.10 plus $122.95 in 
          excess security for a total of $5593.05, rather than the $6498.18  
          found by the Administrator.  (The Commissioner notes that the MBR
          stated by the owner in the March 21, 1986 letter is simply 
          incorrect.  The lower figure used by the Administrator was checked 
          by the Commissioner on appeal and found to be correct.)

          All of this excess rent was collected prior to the acquisition of 
          the building in September, 1986 by the petitioner and therefore 
          must be recovered from the prior owners.   The prior owners and/or 
          their managing agent are hereby ordered to make such refund.  If 
          they fail to comply with this directive the tenant must seek 
          recovery in a court of competent jurisdiction.  However, because 
          this proceediang was a FMRA, this order can not be enforced as a 
          judgment.





          The petitioner obviously had standing to file this appeal since the 
          petitioner was bound by the fair market rent established by the 
          Administrator.  Furthermore, the Commissioner finds the tenant's 
          assertion that the Administrator's order should be enforced without 
          modification against the prior owners is without merit.  Such a 






          DOC. NO.: ARL 10384-K

          result would yield two co-existing contradictory orders, 
          establishing two different rents for the same apartment.

          All rents subsequent to the 1985-1986 rent established herein must 
          be based on that rent.  The petitioner is hereby directed to refund 
          any rent collected in excess of the rent established herein subject 
          to lawful increases.  If the owner fails to do this, the tenant can 
          deduct the amount collected by the petitioner from subsequent 
          rents.

          On the other hand, if the owner has already complied with the 
          Administrator's Order and, as a result of the instant 
          determination, there are arrears due to the owner from the tenant, 
          the tenant may pay off the arrears in twenty-four equal monthly 
          installments during the next twenty-four months.  Should the tenant 
          vacate after the issuance of this Order, all arrears are due 
          immediately.

          THEREFORE, in accordance with the Rent Stabilization Law and Code, 
          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 the Order and Opinion.

          ISSUED:
                                                                          
                                             ELLIOT SANDER
                                             Deputy Commissioner






    

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