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
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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 :
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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withdrawn.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confirming the owner's assertion that the complaint was withdrawn.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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