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
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 :
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
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,
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
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
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
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
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
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
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
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.