DOCKET NUMBER: BA 210051-RO
                                 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 NO.: BA 210051-RO
                                         :  
                                            DRO DOCKET NO.: K 3105609-R
                                                            CDR 28,176
     JRD MANAGEMENT        PETITIONER    : 
     ------------------------------------X                             

           ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW

     On January 13, 1987, the above named petitioner-owner filed a Petition for 
     Administrative Review against an order issued on December 9, 1986, by  the
     District Rent Administrator, 10  Columbus  Circle,  New  York,  New  York,
     concerning housing accommodations known as Apartment 4E at  599  East  7th
     Street, Brooklyn,  New  York,  wherein  the  District  Rent  Administrator
     determined that the tenant had been overcharged.

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

     This  proceeding  was  originally  commenced  by  the  filing  of  a  rent
     overcharge complaint by the tenant, Angel Rodriquez, dated March 1, 1984.

     The tenant took occupancy pursuant to  a  one  year  lease  commencing  on
     November 15, 1981 and expiring on October 31, 1982 at a  monthly  rent  of
     $395.  

     In its answer the owner stated that it had purchased the building on  June
     1, 1982, and admitted that there was a  rent  overcharge  in  the  vacancy
     lease of the tenant.  The owner  credited  the  tenant's  account  in  the
     amount of $1,140.62, on or about May 4, 1984, and  rolled  back  the  rent
     from $439.56 to $390.91.  The answer also states that the  owner  believed
     that since the tenant accepted the rent adjustment, that the complaint was 
     withdrawn.

     A fact which was unknown to the Administrator at the time  the  order  was
     issued is the tenant checked off a box, in response  to  a  DHCR  inquiry,
     confirming the owner's assertion that the complaint was withdrawn.

     In Order Number CDR 28,176, the administrator found  that  the  owner  had
     failed to submit a complete rental  history,  determined  that  the  legal
     regulated rent would be established by using the DHCR's Section  42A  rent
     roll procedure; established the legal  regulated  rent  for  the  tenant's
     vacancy lease at $316 per month, in accordance with the default procedure, 
     and ordered the owner to make full refunds to the tenant for any rent paid 
     in excess of the lawful stabilization rent.



     In this petition the owner objected to the order because, as mentioned  in
     their answer, the owner fully refunded to the tenant the amounts in excess 






          DOCKET NUMBER: BA 210051-RO
     of the legally regulated rent, and reduced the monthly rent charged to the 
     lawful rent based upon the Rent Guidelines.

     The Commissioner is of the opinion that this petition should be granted in 
     accordance  with  the  directives  of  the  Appellate   Division,   Second
     Department, pursuant to the case of J.R.D. Mgt.  v.  Eimicke,  148  A.D.2d
     610, 539 N.Y.S.2d 667 (2nd Dept., 1989).

     Section 42A of the former Rent Stabilization Code requires that  an  owner
     retain complete records for each stabilized apartment in effect from  June
     30, 1974 (or the date the apartment became subject to rent  stabilization,
     if later) to date and to produce such records to the DHCR upon demand.

     Section 26-516 of Rent Stabilization Law, effective April 1, 1984, limited 
     an owner's obligation to provide rent records by providing that  an  owner
     may not be required to maintain or produce rent records for  more  than  4
     years  prior  to  the  most  recent   registration,   and   concomitantly,
     established a 4 year limitation on the calculation  of  rent  overcharges.
     It has been the DHCR's policy that overcharge complaints  filed  prior  to
     April 1, 1984 are to be processed pursuant to the Law or  Code  in  effect
     on March  31,  1984.   (See  Section  2526.1(a)(4)  of  the  current  Rent
     Stabilization Code.)  The DHCR has therefore applied  Section  42  of  the
     former Code to  overcharge  complaints  filed  prior  to  April  1,  1984,
     required complete rent records in these cases.  In following this  policy,
     the DHCR has sought to be consistent with the legislative  intent  of  the
     Omnibus Housing Act (Chapter 403, Laws of 1983), as implemented by the New 
     York City Conciliation and Appeals Board (CAB), the predecessor agency  to
     the DHCR, to determine rent overcharge complaints filed with the CAB prior 
     to April 1, 1984 by applying the law in effect at the time such complaints 
     were filed so as not to deprive such tenants of their right  to  have  the
     lawful stabilized rent determined from the June 30, 1974 base date and  so
     as not to deprive tenants whose overcharge  claims  accrued  more  than  4
     years prior to April 1, 1984 of their right to recover  such  overcharges.
     In such cases, if the owner failed to produce the required  rent  records,
     the lawful stabilized rent would be determined  pursuant  to  the  default
     procedure approved by the Court of Appeals in 61  Jane  Street  Associates
     v. CAB, 65 N.Y.2d 898,  493 N.Y.S.2d 455 (1985).

     However, it has recently been held in the case of J.R.D. Mgt. v.  Eimicke,
     148 A.D.2d 610, 539 N.Y.S.2d 667 (App. Div. 2d  Dep't  1989),  motion  for
     leave to reargue or for leave to appeal to the  Court  of  Appeals  denied
     (App. Div. 2d Dep't, N.Y.L.J., June 28, 1989, p. 25,  col.1),  motion  for
     leave to appeal  to  the  Court  of  Appeals  denied  (Court  of  Appeals,
     N.Y.L.J., Nov. 24, col.4)., motion for leave to reargue denied  (Court  of
     Appeals, N.Y.L.J., Feb. 15, 1990, p.25, col.1), that the law in effect  at
     the time of the determination of the administrative complaint rather  than
     the law in effect at the time of the  filing  of  the  complaint  must  be
     applied and that the DHCR could not require an owner to produce more  than
     4 years of rent records.

     Since the issuance of the decision in JRD, the Appellate  Division,  First
     Department, in the case of Lavanant v. DHCR, 148 A.D.2d 185, 544  N.Y.S.2d
     331 (App. Div. 1st Dep't 1989), has issued a decision in  direct  conflict
     with the holding in JRD.  The Lavanant court expressly rejected the JRD 

     ruling, finding that the DHCR may properly  require  an  owner  to  submit
     complete rent records, rather than records for just four years,  and  that
     such requirement is both rational and supported by the law and legislative 
     history of the Omnibus Housing Act.






          DOCKET NUMBER: BA 210051-RO

     Since in the  instant  case  the  subject  dwelling  unit  is  located  in
     Brooklyn, which is in the Second Department, the DHCR  is  constrained  to
     follow the JRD decision in determining the tenant's overcharge  complaint,
     limiting the requirement for rent records to April 1, 1980.

     A review of the lease history indicates that the prior tenant's  rent  was
     $281.03.  Using Rent Guideline Number 13, the increase in rent for  a  one
     year lease was 10%, plus a vacancy increase of 15%,  the  legal  regulated
     rent for the tenant in this action is $351.29.

     The monthly rent in the vacancy lease was $395 a month, an  overcharge  of
     $43.71 a month.  The owner credited the tenants  rental  account  for  the
     overcharges occurring from June 1, 1982 to June 1, 1984, and  on  June  1,
     1984 rolled back the rent to the lawful regulated rent, which at that time 
     was $390.91.

     The tenant was not given a refund for rental  overcharges  occurring  from
     November 15, 1981 to May 31,  1982  because  the  building  was  owned  by
     another owner during those time periods.  Section 2526.1(f)(1) of the Rent 
     Stabilization Code states:

                    "For overcharges collected prior  to  April  1,
                     1984,  an  owner  will  be  held   responsible
                     for his or her  portion  of  the  overcharges,
                     in   the   absence   of   collusion   or   any
                    relationship  between  such   owner   and   any
                     prior owners."

     Therefore,  JRD  Management,  will  not  be  held  liable  for  the   rent
     overcharges occurring during November 15, 1981 through May 31, 1982, since 
     the building at that time was not owned by the petitioner.  This denial of 
     rent overcharges for  the  abovementioned  time  period  is  done  without
     prejudice to the tenant's right to pursue legal remedies against the prior 
     owner of the building in a court of competent jurisdiction.

     This order places both parties in the position they would have been in had 
     the administrator been aware of the tenant's withdrawal of the  complaint,
     prior to rendering a decision.

     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  and  the
     Rent Administrator's order  be,  and  the  same  hereby  is,  modified  in
     accordance with this order and opinion.

     ISSUED:






          DOCKET NUMBER: BA 210051-RO



                                                                   
                                            ELLIOT SANDER
                                         Deputy Commissioner




                                                   
    

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