ADM. REVIEW DOCKET NOS.: BA 410138-RT AND DL 410354-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 NOS.: BA 410138-RT
DL 410354-RO
: D.R.O. DOCKET NOS.:
ZAA-400123-RV
ZL-3114875-RT
PERLBINDER REALTY CORP., AND
85TH ESTATES CO.,
TENANT: STEWART MANDLER
PETITIONERS :
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ORDER AND OPINION DENYING PETITIONS FOR ADMINISTRATIVE REVIEW
On Janua y 2, 1987 the above named petitioner owner-
Perlbinder Realty Corp. filed a Petition for Administrative Review
(Docket No. BA 410138-RT) against an order (Docket No. ZAA-400123
RV) issued on November 28, 1986 by the District Rent
Administrator/Director of Processing (hereinafter "Director"), 92
31 Union Hall Street, Jamaica, New York concerning housing
accommodations known as Apartment 35G at 185 East 85th Street, New
York, New York wherein the Director determined that Stewart
Mandler was the prime tenant of the subject apartment and was
eligible for all the rights of a Rent Stabilized tenant, including
the right to a renewal lease.
On December 26, 1989 the above named petitioner-owner 85th
Estates Co. filed a Petition for Administrative Review (Docket No.
DL 410354-RO) against an order (Docket No. L-3114875-RT) issued on
November 21, 1989 by the District Rent Administrator (hereinafter
"Administrator"), 92-31 Union Hall Street, Jamaica, New York
concerning the subject apartment, wherein the Administrator
determined an overcharge of $142,502.03 and dismissed the
complainant's Fair Market Rent Adjustment Application ("fair
market rent appeal").
As these proceedings involve common grounds of law and fact,
they are herein merged and decided in one order and opinion.
The Commissioner notes that the overcharge proceeding was
filed 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
provision in effect on March 31, 1984. Therefore, unless
otherwise indicated, reference to Sections of the Rent
ADM. REVIEW DOCKET NOS.: BA 410138-RT AND DL 410354-RO
Stabilization Code (Code) contained herein are to the Code in
effect on April 30, 1987.
The issue in these appeals is whether the Director's and the
Administrator's orders were warranted.
The applicable sections of the Law are Section 26-516 of the
Rent Stabilization Law, Section 2526.1(a) of the current Rent
Stabilization Code, and Sections 2(h), 10B, 20A, 21, 35A, 42A, 62
and 63 of the former Rent Stabilization Code.
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.
The lease renewal proceeding (Docket No. AA 400123-RV) was
originally commenced by the filing in December, 1985 of a Tenant's
Complaint of Owner's Failure to Renew Lease, in which the tenant
stated that he had commenced occupancy on December 15, 1983 at a
rent of $1,800.00 per month, and in which he claimed that he was
the subtenant of an illusory prime tenant, the owner of the
property, who was repeating his wide-standing practice of renting
at an inflated rent an apartment claimed to be for his personal
use and occupancy, although the owner no longer had any intent to
occupy the unit. With his complaint the tenant included a
standard apartment lease for two years and one-half month on which
the rent stabilization language was obliterated, and which
contained no rent stabilization rider. The lease included a rider
providing that the tenant would remove the furnishings from the
apartment, and return them upon vacating. An inventory of
furnishings was also included. The landlord was listed as
"Perlbinder Realty Corp., By: Charles H. Greenthal & Co. Inc.,
Agent." All documents were signed by Julius Perlbinder as
landlord.
By letter February 18, 1986 the owner's (prior) attorney,
stating that she represented the owner 85th Estates Company,
requested a 3-week extension of time to answer. By letter dated
May 14, 1986 she requested a further extension of time in view of
recent settlement discussions. On November 4, 1986 the tenant
stated that no settlement discussions had taken place, and that he
had still not received a renewal lease. The Director's order
finding him to be the prime tenant, and naming Perlbinder Realty
Corp. c/o Charles H. Greenthal Co. Inc. as the owner, was issued
later that month.
Perlbinder Realty Corporation, in its petition (Docket No. BA
410138-RT) against that order, contends in substance that
Manhattan Savings Bank is the owner of the subject premises; that
85th Estates Company, a partnership, is the net lessee with a 99-
year lease, and should be considered the owner for present
purposes; that Perlbinder Realty Corporation is not the owner, but
is rather the corporate entity of the prime tenant Julius
Perlbinder which entered into a sublease with the complainant;
that the DHCR was advised that 85th Estates Company, not
Perlbinder Realty Corp., was the owner of the subject premises;
that the prime tenant Julius Perlbinder is a minority partner in
ADM. REVIEW DOCKET NOS.: BA 410138-RT AND DL 410354-RO
85th Estates Company; that he entered into a long-term lease for
the apartment when the subject premises was built in 1967; that he
actually resided in the subject apartment with his wife as the
primary tenant for many years; that he is now semi-retired and
spending more of his time in Florida; that he received permission
from the owner 85th Estates Company to sublet his apartment; that
any rental monies paid by the subtenant to Julius Perlbinder are
personal to Mr. Perlbinder and do not go to the owner; and that
the intent of the parties to make a sublease with no right to
renewal is evidenced by the fact that the paragraph relating to
renewal of leases pursuant to the Rent Stabilization Law was
blacked out, that there was no Rent Stabilization Rider attached,
and that the apartment contained Mr. Perlbinder's furnishings to
be used by him when he returned sometime in the future.
Perlbinder Realty Corporation also contends in substance that the
DHCR did not reply to a May 14, 1986 letter by its former attorney
requesting an extension of time to interpose an answer, due to
settlement negotiations; that the Administrator's order was
therefore issued without the owner having an opportunity to
interpose an answer; that if the DHCR had given the owner an
opportunity to interpose an answer, such answer would have stated
substantially the facts outlined in the present petition; that the
Administrator's order would not have been warranted if the DHCR
had knowledge of such facts; that the practical effect is to
evict the prime tenant Julius Perlbinder without due process of
law based on a failure-to-renew-lease complaint by a subtenant
with no right to a renewal lease; that evicting Mr. Perlbinder and
requiring him to leave his furnishings at the apartment as a
required service deprives him of his property without due process
of law; and that the complainant has not submitted any proof that
Mr. Perlbinder has sublet any other apartment in the building,
that he has not been the one and only prime tenant of the subject
apartment, or that he does not intend to return to the apartment
in the future.
In the rent overcharge and fair market rent appeal proceeding
(Docket No. L-3114875-RT), which the complainant commenced in
March, 1984, the owner's former attorney in 1985 asserted that the
tenant was not entitled to a fair market rent appeal since he was
a subtenant, and stated that the subject building was constructed
in 1967. On January 5 and February 24, 1989 the owner was sent
requests for copies of Mr. Perlbinder's prime leases and for proof
that Mr. Perlbinder did not have another primary residence. On
April 4, 1989 the owner was sent a Final Notice of Pending
Default, which stated in substance that unless leases from the
base date were submitted within 20 days, certain DHCR default
procedures would be used to establish the lawful stabilization
rent, and treble damages would be imposed on willful overcharges
occurring on or after April 1, 1984.
On April 13, 1989 the owner was notified that the
preponderance of the evidence indicated a willful overcharge, and
that the owner had 21 days to submit evidence to rebut a finding
of willful overcharge. In answer, the owner contended that the
subject apartment had always been exempt from rent stabilization
by virtue of owner occupancy. The owner also made substantially
all the same assertions it made in the appeal (Docket No. BA
410138-RT) summarized supra. The owner did not submit the
ADM. REVIEW DOCKET NOS.: BA 410138-RT AND DL 410354-RO
evidence that had been requested in January and February.
On April 17, 1989 the tenant advised that he had, on the
advice of counsel, discontinued paying rent as of May 1, 1987.
On May 5, 1989 the owner repeated the same arguments as
before, and additionally asserted that treble damages should not
be imposed if any overcharge were to be found, as such overcharge
would have been due to a good faith but wrongful interpretation of
the law and facts by a non-attorney and not due to willfulness.
In an order issued on November 21, 1989 the District Rent
Administrator dismissed the fair market rent appeal and, based on
the failure of the prime tenant/owner-partner to provide a full
rental history or to substantiate that the subject apartment was
continuously occupied by the owner without payment of rent from
the base date, found an overcharge of $142,502.03 as of April 30,
1987, including treble damages on overcharges occurring on or
after April 1, 1984. The order named 85th Estates Co. c/o
Perlbinder Realty Co. as the owner, Julius Perlbinder c/o
Perlbinder Realty Co. as the prime tenant, and Charles H.
Greenthal & Co., Inc. as the managing agent.
In its petition (Docket No. DL 410354-RO) against that
order, 85th Estates Co. contends in substance that the subject
apartment was never subject to rent stabilization due to owner
occupancy; that even if the complainant's subtenancy was subject
to rent stabilization then the submission of the sublease
constitutes submission of a rental history from the base date, so
there has been no default; that there were never any leases prior
to the subtenancy; that, accordingly, if the subtenancy is subject
to rent stabilization then the initial sublease rent of $1,800.00
became the initial legal base stabilization rent; that if an
overcharge should be found then the legal stabilized rent should
take into account the fact that the apartment was sublet as a
fully furnished and decorated apartment; and that treble damages
should not have been imposed.
In answer, the tenant asserts in substance that he had a
lease, headed "Standard Form of Apartment Lease," with Perlbinder
Realty Corp. and not a sublease with Julius Perlbinder; that while
the apartment was furnished at the time of renting, the lease
rider provided that the tenant would remove the furniture from the
apartment and return it upon vacating at his own expense; that it
appears that there was no furnished subletting, but rather an
attempt to give an appearance of one; that the statement that
there had been no leases for the subject apartment other than the
sublease is untrue, as he has ascertained that there was a prior
tenant, Lydie Laurent, whose cable-TV receipt [without a legible
apartment number] he is enclosing; that Julius Perlbinder's claim
that he is just a layman mistaken as to the law is undermined by a
Court of Appeals decision involving the same building (although
the address is given as 85 East 85th Street rather than 185 East
85th Street), and someone who is obviously a relative, doing
exactly the same sort of illusory subletting; and that the
petitioner has schemed and plotted in an attempt to evade the Rent
Stabilization Code. With his answer the tenant has enclosed a
ADM. REVIEW DOCKET NOS.: BA 410138-RT AND DL 410354-RO
1986 Court of Appeals decision in which the Court found the New
York City Conciliation and Appeals Board (C.A.B.) to have been
warranted in finding Barton Mark Perlbinder, a partner n a 442-
unit residential building at 85 East 85th Street, to have been an
illusory prime tenant by virtue of occupying two adjoining
apartments from approximately 1968 to 1974 and, upon vacating them
with no intention of returning, subletting them to tenant Frangos
and later refusing to renew the sublease. [While the DHCR
apartment registration system does not show a stabilized building
at the 85 East 85th Street address named in the opinion, it does
list the subject building at 185 East 85th Street as having
approximately 434 residential apartments. C.A.B. Opinion No.
26207, upheld in the Court of Appeals decision, had listed the
tenant, Chrysoula Frangos, as being at 185 East 85th Street but
had listed the subject apartment as being 85 East 85th Street,
Apartments 30G and 30H. In 1984 Apartment 30GH at 185 East 85th
Street was registered as being occupied by its owner, Mark
Perlbinder. In 1986 he was registered at a stabilized rent of
$400.00, and in 1987 Caryspula Frangos was registered at a rent of
$1,592.45. The C.A.B. opinion clearly pertains to the subject
building at 185 East 85th Street.]
On April 4, 1991 a notice was sent to 85th Estates Company in
care of its attorney, requesting evidence of Julius Perlbinder's
occupancy of the subject apartment from May 31, 1968 until the
time he left. Copies of this request were also sent to Julius
Perlbinder c/o Perlbinder Realty Corp., and Perlbinder Realty
Corp. c/o Charles H. Greenthal and Co., Inc. No reply has been
received from any of these to date.
In response to another notice the tenant contends in
substance that New York Telephone Company and Long Island Lighting
Company have a Julius Perlbinder at an address in Nassau County;
that LILCO indicates that there has been electrical service at
that address for over 20 years; that the 1990-91 Manhattan
Telephone directory lists Julius Perlbinder at a residence of 429
East 52nd Street [at a different telephone number than, although
in the same building as, Perlbinder Realty Corp.]; that such
telephone service commenced on or about March 16, 1976; that
Julius Perlbinder has a non-published telephone listing in Broward
County, Florida; that subpoenas should be issued to New York
Telephone, LILCO, Consolidated Edison and Florida Telephone
Company to obtain evidence that would confirm these claims; and
that two tenants living on the same floor as the tenant indicate
that they have seen various other people occupy the apartment
prior to the complainant. With this response the tenant has
enclosed statements (signed but not notarized) from two tenants,
claiming to have lived on the same floor as the subject apartment
since 1969 and 1973, in which they state that they have known the
complainant since 1983 and that a Ms. L. Laurent, a man from
Texas, and a couple from the South African embassy or government
lived in the subject apartment for several years each prior to
the time the complainant commenced occupancy.
The Commissioner is of the opinion that these petitions
should be denied.
ADM. REVIEW DOCKET NOS.: BA 410138-RT AND DL 410354-RO
With respect o the lease-renewal case (Docket Nos. AA-
410123-RV/ BA 420138-RT), the Commissioner finds that the
Director was warranted in issuing an order based on the record,
six months after the owner's attorney had last requested an
extension of time (which was not granted), and after the tenant
had stated that there had been no settlement discussions.
However, the Commissioner notes that the arguments and evidence
which the owner states it would have submitted if it had been
allowed to are being considered herein in the appeal of the
overcharge proceeding.
An apartment otherwise subject to stabilization is exempt
during the time that is occupied by its owner as her or his
primary residence. If the owner occupies the apartment from the
base date, then the rent charged the first tenant becomes the
initial legal stabilized rent, and the lawful rent for subsequent
tenants is based on lawful increases above the initial legal
stabilized rent.
A tenant who occupies a rent stabilized apartment as his or
her primary residence may generally, with approval of the owner,
sublet the apartment, at a lawful rent no greater than his or her
rent plus an increase for any additional services that the
subtenant receives which are not already included in the prime
tenant's rent. The subtenant has the right to a stabilized
sublease, since the subtenant generally has all the rights of a
stabilized tenant other than those relating to renewal leases and
to cooperative or condominium conversion. For the sublease to be
a legitimate sublease, rather than an assignment, the prime tenant
must intend to resume occupancy at the conclusion of the sublet.
The facts of the present case evince an attempt by Julius
Perlbinder to create a new class of landlord having aspects of
both tenant and owner. He cannot have it both ways, and the
appeal fails whether he is regarded as a tenant or as an owner.
As a (prime) tenant, Mr. Perlbinder is claimed to have a
lease and to be subletting to the complainant. However, Mr.
Perlbinder's rent would have to be shown to be a lawful
stabilized rent, whether by virtue of being the first stabilized
rent or by virtue of there having been only lawful increases since
the base date. While Mr. Perlbinder claims to have been the first
tenant, his rent has not been proven and is not even known, even
though the owner was requested on two occasions to submit a copy
of his prime lease. If Mr. Perlbinder is regarded as a prime
stabilized tenant, then the Administrator's order is warranted
because the owner has not furnished the necessary rental history
to justify the complainant's rent. (In addition, as is shown
infra, it is unlikely that Mr. Perlbinder intended to resume
occupancy at the conclusion of the sublet, or that the subject
apartment was actually his primary residence up to the time that
the complainant commenced occupancy.)
However, the owner's former attorney stated in Docket No. BA
410138-RT that Mr. Perlbinder had "a long-term lease" for the
subject apartmen , thus suggesting that he was not a rent-
stabilized tenant but was more in the position of an owner
ADM. REVIEW DOCKET NOS.: BA 410138-RT AND DL 410354-RO
(somewhat similar to the 99-year net lessee of the building), even
though it seems unusual for a member of a partnership to
essentially pay rent to himself and even though Mr. Perlbinder
should have had a stabilized lease if he was actually going to be
a rent-paying tenant. If Mr. Perlbinder is regarded as an owner,
and the subject apartment is regarded as exempt from rent
stabilization during the time that he occupied it without paying
rent (although this has not been shown and is contradicted by the
claim of a long-term lease for an apartment used for residential
purposes), then the first stabilized tenant after Mr. Perlbinder
vacated should have been offered a stabilized lease with a right
to renew, rather than a sublease without such a right. While the
complainant's initial rent may have been the initial legal
stabilization rent if there had been no other tenancies between
the time Mr. Perlbinder ended a legitimate owner occupancy and the
time the complainant commenced occupancy, the owner has not shown,
even though requested several times to do so, that Mr. Perlbinder
occupied the subject apartment as the only tenancy prior to the
complainant's. In fact, it appears quite unlikely both that Mr.
Perlbinder's was the only tenancy and that he had any intention of
returning after the expiration of the "sublease." The statements
of the long-term tenants on the same floor regarding prior
tenancies are suggestive, as is the repeated failure of the owner
to provide the requested evidence of Mr. Perlbinder's dates of
occupancy. While the complainant's allegations about
Mr.Perlbinder having residences in Florida and Nassau County in
1990 would, even if proven, not be conclusive since it was
admitted that Mr. Perlbinder was semi-retired to Florida and since
it might be expected that someone who could not return to an
apartment in Manhattan because of a DHCR order might find another
residence in the area, an examination of the 1980 (copyright 1979)
and 1985 New York Telephone and NYNEX directories for Nassau
County reveals listings for a Julius Perlbinder at the same
address and telephone number as in the 1990 listing submitted by
the complainant. In 1979 Mr. Perlbinder was supposedly residing
at the subject apartment, and in 1985 he was presumably preparing
to return from Florida to the subject apartment at the expiration
of the "sublease."
Regarding the contention of Perlbinder Realty Corp. in Docket
No. BA 410138-RT that it is not the owner and that any rental
monies paid by the complainant "are personal to Julius Perlbinder
and do not go to the owner herein," the fact that Perlbinder
Realty Corp. was listed as owner on the complainant's lease, and
was therefore entitled to receive rent, makes it an "owner" as
defined by the Rent Stabilization Code. To the extent that this
argument might be made in an attempt to exclude 85th Estates Co.
from liability, it is also rejected. As managing partner who
received the permission of 85th Estates Co. to "sublease" to the
tenant, his knowledge must be imputed to it. Regarding its
contention that the owner was deprived of his furniture without
due process of law: Unlike the case involving Barton Mark
Perlbinder, where the Court of Appeals upheld the C.A.B. finding
that furniture was a required service, the Administrator did not
ADM. REVIEW DOCKET NOS.: BA 410138-RT AND DL 410354-RO
make any determination as to furniture in the present case. The
apartment did contain what appears to be a normal complement of
furniture (except for the lack of a bed) when the complainant
commenced occupancy, according to the inventory. Rather than Mr.
Perlbinder himself arranging for secure storage of his own
furniture to await his eventual return, or his providing that the
furniture would remain in the apartment, he took the unusual step
of requiring the tenant to remove the furniture, which would
presumably be stored at a location and under conditions that Mr.
Perlbinder would not have knowledge or control of. Given that
this order is upholding the Administrator's finding that Mr.
Perlbinder was willfully evading the rent laws, it seems
distinctly possible that the intent or at least the expectation of
the parties was that the furniture would remain in the apartment,
and that the lease rider regarding its removal was not intended
seriously but only designed to give an appearance that Mr.
Perlbinder intended to return. This order does not make a
determination as to the actual intent of the parties regarding the
furniture.
Regarding the contention that the parties did not intend a
stabilization lease: an apartment subject to the Rent
Stabilization Law and Code does not become exempt because of a
failure to execute a stabilization lease, since a tenant may not
waive his or her rights.
Regarding the assertion that treble damages should not be
imposed because Julius Perlbinder simply made mistakes of fact and
law: for the reasons given herein and in the Administrator's order
the Commissioner does not consider that the presumption of
willfulness has been rebutted, particularly since another partner
in the subject building (and quite possibly a relative of
Julius Perlbinder, as there are telephone listings for only six
Perlbinders in New York City and Nassau, Suffolk, Westchester and
Rockland Counties) engaged in the same sort of illusory
subleasing.
This order may, upon the expiration of the period in which
the owner may institute a proceeding pursuant to Artic e seventy-
eight of the civil practice law and rules,be filed and enforced by
the tenant in the same manner as a judgment or not in excess of
twenty percent thereof per month may be offset against any rent
thereafter due the owner.
THEREFORE, in accordance with the Rent Stabilization Law and
Code, it is
ORDERED, that these petitions be, and the same hereby are,
denied and that the Director's and the Administrator's orders be,
and the same hereby are, affirmed. The overcharge as of April 30,
1987, including excess security of $1,233.25, is $142,502.03.
ISSUED:
ADM. REVIEW DOCKET NOS.: BA 410138-RT AND DL 410354-RO
ELLIOT SANDER
Deputy Commissioner
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