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 
     IN THE MATTER OF THE ADMINISTRATIVE         :  ADMINISTRATIVE REVIEW
     APPEAL OF                                      DOCKET NOS.: ART 10878-L
                                                 :               ARL 10917-L
     JULIUS SHAPIRO,PETITIONER-TENANT               DRO DOCKET NO.: CDR 16,018
     THIRD AVE ASSOCIATES, PETITIONER-PRIOR OWNER
     111 REALTY COMPANY,   PETITIONER-OWNER      : 
     --------------------------------------------X                             

       ORDER AND OPINION DENYING TENANT'S PETITION FOR ADMINISTRATIVE REVIEW
                    AND GRANTING OWNERS' CONSOLIDATED PETITIONS

     These petitions have been consolidated pursuant to Rent Stabilization Code 
     Section 2529.1(c) as they involve common issues of law or fact.

     On  June  9,  1986,  the  above  named  petitioners  filed  Petitions  for
     Administrative Review against an order issued on May 5, 1986, by the  Rent
     Administrator, 10 Columbus Circle, New York, New York, concerning  housing
     accommodations known as Apartment 14K, 111 Third  Avenue,  New  York,  New
     York, wherein the Rent Administrator determined that  there  had  been  an
     overcharge and ordered a  refund  of  $5,460.37,  including  interest  and
     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 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  26,  1984  by  filing  an
     overcharge complaint with the  New  York  City  Conciliation  and  Appeals
     Board  (CAB),  the  agency  formerly  charged  with  enforcing  the   Rent
     Stabilization Law, based in part on an alleged failure  by  the  owner  to
     provide a complete rental history.

     The prior  owner  failed  to  answer  the  complaint  although  given  the
     opportunity to do so.  On January 22, 1986, the prior  owner  advised  the
     Administrator that the subject building had been  sold  as  of  August  1,
     1985.

     On January 31, 1986, the current owner was served  with  an  copy  of  the
     complaint.  In a letter dated February 4, 1986, the owner asked for an 







          DOCKET NUMBERS: ART 10878-L, ARL 10917-L
     extension of thirty days to enable its managing agent time to  answer  the
     complaint.  In a letter dated February  6,  1986,  the  attorney  for  the
     managing agent asked to be served with a copy of the complaint and  stated
     the owner's intention to "fully cooperate with the DHCR in this matter."

     In a letter dated March 10, 1986 the attorney of the managing agent stated 
     that it was "still attempting to obtain prior leases from the prior owners 
     and [would] forward them as soon as they were available."   "In  order  to
     avoid default" a then-current rent roll was submitted with the letter.

     In Order Number CDR 16,018, issued May 5,  1986,  the  Rent  Administrator
     determined that the owner had failed to submit a complete  rental  history
     and established the legal stabilized rent pursuant to Section 42A  of  the
     former Code.

     In petition  number  ART  10878-L,  the  tenant  contends  that  the  Rent
     Administrator's Order is incorrect and  should  be  modified  because  the
     order failed  to  allocate  the  overcharges  among  the  owners  and  was
     therefore unenforceable as a judgment and  because  the  order  lists  the
     current owner as the former managing  agent  of  the  current  owner.   In
     addition, the tenant contends that the Administrator  failed  to  properly
     apply the default procedure but not using the lowest rent for a comparable 
     apartment at the time the complainant took occupancy in 1981.  The  tenant
     attaches a  copy  of  the  lease  for  a  purposed  comparable  apartment.
     Finally, the tenant alleges that  the  Administrator's  computation  chart
     stated an incorrect date (September 31, 1983 instead of July 31, 1983)  as
     the termination date for a certain calculation.

     In a letter dated July 14, 1986 the current owner requested  an  extension
     of time to answer the tenant's petition.  On July 18,  1986  an  extension
     was granted to August 2, 1986.

     In an April 3, 1989 supplement to  its  own  petition  the  current  owner
     answers the tenant's petition, alleging that the 42A  procedure  uses  the
     lowest  comparable  rent  according  to  a  then-current  rent  roll,  not
     according to the rents at a the time the complaining tenant first occupied 
     the apartment.  In addition, the owner  argues  that  it  should  only  be
     responsible for the overcharges, if any, that it actually collected.

     On June 9, 1986, the prior and current owners  filed  separate  petitions,
     each contending the Administrator's order  was  incorrect  and  should  be
     modified.  These petitions were given the same docket number, ARL 10917-L.

     The prior owner states that it was enclosing leases and riders dating from 
     April 1, 1968 to substantiate a  lease  history  allegedly  previously  it
     submitted.  The petitioner states it had owned the  subject  premises  for
     May 1, 1982 to August 1, 1985 and that prior  records  "were  provided  by
     the previous landlord."  Based on this rental history, the  owner  asserts
     there was no overcharge.

     The current owner states in its petition and supplement thereto that there 
     was no overcharge.  The owner submits copies of  correspondence  with  its
     former managing agent, in order to prove that  the  owner  had  diligently
     sought to obtain rent records in order to respond to the complaint.  










          DOCKET NUMBERS: ART 10878-L, ARL 10917-L
     The owner alleges that it fired its prior managing agent in  part  because
     of its failure to obtain the rent  records  and  that,  subsequently,  the
     owner was able to obtain the records from two prior owners through its own 
     efforts.

     The owner further alleges that when it acquired the  subject  building  on
     August 6, 1985 it first became aware of over  seventy  pending  overcharge
     complaints against the prior owner.

     In addition, the owner submits  a  copy  of  Administrative  Review  Order
     Number ARL 12,573-L involving another tenant of  the  same  premises.   In
     that order the Commissioner found  that  the  current  owner  had  made  a
     "diligent and good faith effort to secure the relevant rent records  while
     the  proceeding  was  pending"  and  granted  the  owner's   petition   by
     considering  the  rent  records  submitted  on  appeal  and   finding   no
     overcharge.

     Regarding the order appealed herein the  owner  contends  it  was  "wholly
     premature" of the Administrator to  have  applied  the  default  procedure
     because that procedure can properly only be applied when an owner fails to 
     fulfill its obligation under former Section 42A to  provide  rent  records
     the base date.  The owner further contends that in this proceeding it  his
     "duly complied" with Section 42A.

     Attached to the owner's petitions are copies of leases from  1974  to  the
     lease prior to that the complaining tenant.  The owner contends that these 
     leases demonstrate  that the complainant was  never  overcharged  so  that
     application of the default procedure amounted to a windfall to the tenant. 
     Based on the equities and the precedent of the above-cited  Commissioner's
     Order the owner argues that the  leases  submitted  on  appeal  should  be
     considered and the Administrator's order should be revoked.

     In answer to the current owner's petition, the tenant  contends  that  the
     petition was untimely filed on June 16, 1986.   In  addition,  the  tenant
     argues that when the complaint was filed in 1984 the prior owner  did  not
     respond thus "virtually admitt[ing] the facts of the tenant's  complaint."
     The tenant further argues that it is not credible that the  current  owner
     in 1985 would buy a 156  unit  building  in  Manhattan  without  receiving
     rental histories and without being informed of all rental proceedings.

     The tenant cites an August 6, 1986 letter submitted  by  the  owner  which
     referred to leases for sixty-five apartments, none of which concerned  the
     "numerous" apartments for which complaints were then pending at the  DHCR.
     The tenant concludes: "This letter would lead one to  believe  that  those
     leases were turned over at closing," i.e.,  that the owner had  no  excuse
     for not submitting them to the Administrator.

     The tenant further argues that because a tenant's lease could  contain  an
     option to purchase the entire building, in which  case  the  sale  to  the
     current owner would have been "voidable",  it "is safe to presume  that  a
     commercial purchaser  had  those  leases  prior  to  or  at  the  time  of
     purchase."

     Regarding the application of the default procedure, the tenant argues that 
     since it has provided a lease for a comparable apartment in effect at  the
     commencement of the tenant's first lease, it was not necessary to rely  on
     a then-current rent roll to determine the lowest comparable rent.







          DOCKET NUMBERS: ART 10878-L, ARL 10917-L
     Regarding the leases submitted by the owner on appeal, the tenant contends 
     that since they were submitted six and half years after the filing of  his
     complaint,  it "is hard to determine if they are accurate of  true...  the
     long delay [being] in the landlord's favor."

     In addition, the tenant alleges that he has  reviewed  phone  books  going
     back twenty years at the public library and was only able to find  one  of
     the five tenants listed in Exhibit I of  the  supplement  to  the  owner's
     petition, the one found being most recent tenant.

     The  tenant  further  alleges  that  in  a  similar  proceeding  involving
     Apartment 10G in the subject building the owner was held  liable  for  the
     overcharge during a period when the prior owner was  still  the  owner  of
     record.

     The tenant recites a series of successive owners,  i.e.,  Tyko  Associates
     (prior to May 1982), Third Avenue Associates (May 1982  to  August  1985),
     Gould Investor ("the current owner"),  and  states  that  the  latter  two
     owners have a common principal, implying collusion.  Furthermore the owner 
     cites a June 5, 1986  letter  written  by  a  principal  of  Third  Avenue
     Associates, a copy of which was sent to 111 Third Avenue Associates  (sic)
     along with a set of the leases which the current  owner  claims  it  never
     had.  The tenant, in effect, implies that claim is belied by the existence 
     of the common  principal  referred  to  above.   Accordingly,  the  tenant
     contends that "the current owner has not been candid  with  the  DHCR  and
     their reasons for the delay on this case are without  merit.   In  further
     support of this contention the  tenant  submits  a  copy  of  a  May  1986
     petition by the present owner to show that the owner  "knew  that  various
     tenants and this tenant had filed complaints with the DHCR."

     The Commissioner is of the opinion that the tenant's  petition  should  be
     denied and that the owners' petitions should be granted.

     For the reasons to be stated below, the  Commissioner  will  consider  the
     leases submitted on appeal.  These leases show there  was  no  overcharge.
     Accordingly, the tenant's petition must be denied.  The tenant's  petition
     challenged the Administrator's application of the  default  procedure  and
     requested allocation of overcharges among the owners.  Since  the  default
     has been cured on appeal, resulting in a finding of  no  overcharge,  both
     issues are now moot.

     Parenthetically, the Commissioner notes that were these overcharges to  be
     allocated, the current owner who acquired the building in 1983,  would  be
     liable  for  overcharges  collected  on  or  after  April  1,  1984,   not
     withstanding  the  owner's  assertion  to  the  contrary.   Secondly,  the
     Administrator correctly used the then-current rent roll  in  applying  the
     default procedure (rather than the rent roll on effect at the time of  the
     tenant's initial tenancy).

     Turning to the owner's petition, at the outset the Commissioner notes that 
     although the owner's supplement to the petition states  the  petition  was
     filed on June 16, 1986, in fact the petition  of  the  current  owner  was
     received on June 11, 1986, the thirty-seventh day after  the  issuance  of
     the Administrator's order  and  the  owner  has  submitted  proof  of  the
     certified mailing thereof  on  the  thirty-fifth  day.   Accordingly,  the
     current owner's petition was timely filed.  (The  prior  owner's  petition
     was actually received on the thirty-fifth day.)







          DOCKET NUMBERS: ART 10878-L, ARL 10917-L
     The current owner  has submitted an copy of a prior Administrative  Number
     Order (ARL 12573-L) for the same building in which on virtually  the  same
     fact pattern as here leases were accepted for the first time on appeal.  

     The Commissioner notes that in another Administrative  Review  Order,  ARL
     12576-L, issued March 8, 1990, the current owner's  petition  was  denied,
     i.e., the lease history was not accepted on appeal,  again  based  on  the
     same fact pattern.  The owner filed an Article 78 proceeding resulting  in
     a stipulation whereby the Division agreed to further consider the  owner's
     appeal, resulting in a new order, issued September 28, 1990,  wherein  the
     leases submitted on appeal were also accepted.   Because  the  complainant
     herein was not a party to  those  proceedings  he  is  not  bound  by  the
     decisions therein.   Nevertheless,  for  the  reasons  stated  below,  the
     Commissioner again finds that the leases submitted  on  appeal  should  be
     accepted.  The tenant that the current owner received a copy of the  prior
     owner's June 5, 1986  letter  and  the  leases  attached  thereto.   Based
     thereon, the tenant infers that the current owner was being deceptive when 
     it told the Administrator that it had not been able to  obtain  to  rental
     history from the prior owners.  However, that letter, which is  the  cover
     letter to the prior owner's petition, was written a month after the  order
     being appealed herein was issued.   (In  addition,  that  letter  asserts,
     albeit without proof, that the same or all of information therein had been 
     submitted to the Administrator in a timely  fashion.)   Accordingly,  this
     argument of the tenant is without merit.

     The tenant's contention that the default of the prior owner amounts to  an
     admission of the facts in the tenant's complaint is  also  without  merit.
     In the first place the default has been denied  by  the  prior  owner  and
     cured on appeal by both the  present  and  prior  owners.   Secondly,  the
     tenant's complaint merely asserts that the owner did not include a  rental
     history rider in the tenant's leases and states the tenant's  belief  that
     he is being overcharged.  Accordingly, even if  the  complaint  is  deemed
     admitted, that admission does not prove any overcharge.

     The tenant's allegation that it is not credible that an owner would buy  a
     156 unit building without receiving rental histories etc. is  contradicted
     by the copies of correspondence between the current and prior owners which 
     was submitted  with  the  current  owner's  petition.   Furthermore,  even
     without such  correspondence, such an allegation  without  proof,  remains
     that: a mere allegation.

     The tenant cites one of the letters just referred to wherein  the  current
     owner states that it received leases for 65 apartments in  July  31,  1986
     for the prior owner.  From this the tenant wishes to infer that leases for 
     the other apartments were delivered at or before closing.  This  inference
     is contradicted by the letter itself in which the  current  owner  accuses
     the former owner of having "conveniently misplaced the  leases  for  every
     single apartment for while there is a dispute concerning the DHCR."

     Similarly, the tenant's mere  contention  that  because  the  leases  were
     submitted six and  a  half  years  after  the  complaint  was  filed,  and
     therefore are more difficult to disprove, does not suffice to disprove the 
     validity  of  the  submitted  rental  history.   Nor  does  the   unproved
     allegation that a search of telephone books going back twenty years yields 
     only the most recent of the tenants listed in owner's Exhibit I.  (Exhibit 
     I is a rent roll for 1986, for which the Commissioner notes at least three 








          DOCKET NUMBERS: ART 10878-L, ARL 10917-L
     tenants other than the  complainant  appear  in  the  1987-1988  Manhattan
     telephone directory.  The Commissioner assumes the tenant is referring  to
     Exhibit J which is a rent chart listing four prior tenants dating back  to
     1971.

     The leases submitted by the owner are precisely the type of prof  normally
     requested and relied upon by the Division to  document  a  lease  history.
     Having submitted such evidence the burden of proof shifts to the tenant to 
     refute the documentation.  The Commissioner hereby finds that  the  tenant
     met the burden.  The Correspondence in the record shows that  the  current
     owner made diligent good faith efforts to obtain the  lease  history  from
     the prior owner.  Accordingly, the leases are  accepted  on  appeal.   The
     Commissioner has calculated the lawful rents based  on  this  history  and
     finds that there was no overcharge.

     Finally, the Commissioner notes that the tenant's  implied  allegation  of
     collusion between owners 111 Realty Company and Gould Investors due  to  a
     common principal is off point.  These entities share the same  address  as
     well as at least two principals and uses the  same  stationary.   However,
     they are not successive owners of the subject  building.   Instead,  these
     entities seem to be alter egos  of  each  alter,  constituting  the  owner
     and/or manager since August, 1985.

     In view of the foregoing, it is not necessary  to  determine  whether  the
     prior owner defaulted (in whole or in part).  Since  the  current  owner's
     submission of the lease history is accepted on  appeal,  the  consolidated
     petitions of the owners are hereby granted regardless of the extent of the 
     prior owner's default it, if any.

     If the owners have already complied with the Administrator's Order and, as 
     a result of the instant determination, there are arrears due to the owners 
     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 the tenant's petition be, and the same  hereby  is,  denied,
     and the owners' petitions, consolidated under docket number  ARL  10917-L,
     be, and the same hereby are, granted, and the Rent  Administrator's  order
     be, and the same hereby is, revoked.

     Issued:








                                                                  
                                     ELLIOT SANDER
                                     Deputy Commissioner




                                                   
    

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