Docket Number: BB 210274-RO
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 NO.: BB 210274-RO
4149-55 KINGS HIGHWAY, DRO DOCKET NO.: K-3102446-R
PETITIONER : TENANT: GEORGE EISENSTAT
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART, AND MODIFYING ADMINISTRATOR'S ORDER
On February 17, 1987 the above named petitioner-owner filed a
Petition for Administrative Review against an order issued on
January 13, 1987 by the District Rent Administrator, 10 Columbus
Circle, New York, New York concerning the housing accommodations
known as Apartment 2-F at 4149 Kings Highway, Brooklyn, New York,
wherein the District Rent Administrator determined that the owner
had overcharged the tenant.
The issue in this appeal is whether the District Rent
Administrator's order was warranted.
The applicable sections of the Law are Section 26-516 of the Rent
Stabilization Law and Sections 2522.6, 2526.1(a), 2526.1(f), 2527.2
and 2527.6(c) of the 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.
This proceeding was originally commenced by the filing in March,
1984 of a rent overcharge complaint by the tenant, in which he
stated that he had commenced occupancy on October 1, 1983 at a rent
of $275.00 per month.
The (former) owner (4149-55 Kings Highway, P.O. Box 14067, Church
Street Station, New York, N.Y.) was served with a copy of the
tenant's complaint and was requested to submit leases from the base
date. On October 2, 1984 49-55 K-H Associates (100 Ocean Parkway,
Suite BB, Brooklyn) requested an extension of time to answer, and on
November 19, 1984 its attorney submitted a prior tenant's lease from
January 1, 1982 to December 31, 1982 at a rent of $260.00, stated
that the inadvertent collection of a vacancy allowance resulted in
the complainant being charged $275.00 commencing October 1, 1983
rather than $270.40, and advised that 49-55 K-H Associates had
acquired the subject premises on June 11, 1984. The owner's
attorney also stated that overcharges to date would be refunded.
On March 19, 1986, 4149-55 Kings Highway Associates (P.O. Box 14067)
was served with a Final Notice of Pending Default, which stated in
substance that unless leases were submitted from the base date
certain DHCR procedures would be used to establish a lawful
Docket Number: BB 210274-RO
On July 24, 1986 a letter was received from the tenant stating that
he had not received a refund, but that his rent had been reduced to
$294.74. On November 3, 1986, 4149-55 Kings Highway Associates was
served with another Final Notice of Pending Default at P.O. Box
14067. At the bottom of the Notice, which was also sent to the
owner's attorney, was written a request for the name and address of
the former owner.
On November 14, 1986 a letter was received from the 49-55 K-H
Associates' attorney stating that, pursuant to the Notice of Pending
Default, the prior owner was Louis Pashman, 331 Madison Avenue, Room
402, New York, New York. The attorney stated that he assumed that
that was the only information required as it was specifically
requested on the notice, and asked to be notified if additional
documentation was required. That same day a copy of the tenant's
complaint was sent to Mr. Pashman. In reply, Mr. Pashman asserted
that 4149-4155 Kings Highway Associates no longer existed, and that
the property had been sold on June 11, 1984 to Robert Wilson and
Michael Moss, 41-49 K-Y Associates, 100 Ocean Parkway, Apt. 3-BB,
Brooklyn, New York.
In an order issued on January 13, 1987 the Administrator determined
that, due to the owner's failure to submit a complete rental
history, the tenant had been overcharged in the amount of $2,291.18
as of August 31, 1986. The order directed the owner to refund such
overcharge to the tenant as well as to reduce the rent. The order
was sent to 4149-55 Kings Highway at P.O. Box 14067, and to the
attorney for 49-55 K-H Associates.
The recipient of the order sent to "4149-55 Kings Highway" at P.O.
Box 14067 wrote on the first page of the order: "Wrong owner.
Property sold June 11, 1984 to Michael Moss, c/o 41-49 KY
Associates, 100 Ocean Parkway, 3BB, Brooklyn, New York 11218," and
mailed it back to the DHCR.
In this petition, 4149-55 Kings Highway, by the same attorney as 49
55 K-H Associates of 100 Ocean Parkway, contends in substance that
the Administrator failed to serve the prior owner although informed
of the prior owner's name and address; that this prejudiced the
owner because the prior owner may have additional evidence regarding
the legality of the tenant's rent; that the Administrator did not
search DHCR records to determine if the apartment was previously
subject to rent control; that in response to a November 3, 1986
Final Notice of Pending Default which also requested the prior
owner's name and address, the owner's attorney on November 12, 1986
submitted information about the prior owner and stated then he
assumed that no additional documentation was required because of
the specific request on the notice; that, contrary to the statement
in the Administrator's order that the owner did not respond, the
owner did respond on November 19, 1984 and November 12, 1986; and
that the Administrator improperly expanded the tenant's specific
rent overcharge complaint to a general rent overcharge complaint.
In answer, the tenant asserts in substance that the petition should
Docket Number: BB 210274-RO
On January 2, 1991 the owner by its attorney was given another
opportunity to submit a rental history from April 1, 1980 or a
later, proven base date. To date no response has been received.
The Commissioner is of the opinion that this petition should be
granted in part; and that the District Rent Administrator's order
should be modified.
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 the 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] of the current
Rent Stabilization Code.) The DHCR has therefore applied Section
42A of the former Code to overcharge complaints filed prior to April
1, 1984, requiring 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, in the
determination of 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), in cases involving rent
overcharge complaints filed prior to April 1, 1984.
However, it has recently been held in the case of J.R.D. Mgt. v.
Eimike, 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.J.L., Nov. 24, 1989, p. 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,
Docket Number: BB 210274-RO
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.
Since in the present case the subject dwelling unit is located 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. However, even on
appeal there have been no rent records submitted for periods prior
to 1982, so it is appropriate to affirm so much of the
Administrator's order as found the owner in default.
Regarding the owner's contention that the Administrator improperly
expanded a complaint of specific rent overcharge to a complaint of
general overcharge, a tenant's request for prior leases submitted on
a Tenant's Complaint of Rent Overcharge Form, as was the case
herein, is considered to be a complaint of general rent overcharge,
since without prior leases the tenant generally cannot be sure that
a legal rent is being charged. The owner cannot be said to have
been unfairly prejudiced by having the tenant's complaint treated as
a complaint of general rent overcharge, as the owner was clearly
informed on several occasions that a rental history was required
from the base date.
Regarding the owner's assertion that the Administrator did not
search DHCR rent control records, such records indicate that the
building was newly constructed in 1951 and was therefore not subject
to Rent Control.
While the owner asserts that the prior owner was not served, Louis
Pashman at 331 Madison Avenue was served with the complaint on
November 14, 1986. By letter dated November 30, 1986 Louis Pashman
stated that the property had been sold to Robert Wilson and Michael
Moss, 41-49 KY Associates, 100 Ocean Parkway; that 4149-55 Kings
Highway Associates no longer existed; and that neither Vinnia Realty
nor Louis Pashman had any more connection with the property. The
copy of the order sent to 4149-55 Kings Highway, P.O. Box 14067,
Church Street Station was received by the prior owner and mailed
back with the notation that the property had been sold to Michael
Moss, c/o 41-49 KY Associates. While Section 2526.1 (f) of the
current Rent Stabilization Code would hold a properly-served prior
owner solely responsible for those overcharges collected by it prior
to April 1, 1984, and jointly and severally responsible with the
current owner for overcharges collected by it on and after April 1,
1984, there is some uncertainty as to the name of the prior owner.
The 1984 registration listed the owner as 4149-55 Kings Highway
Associates at the 331 Madison Avenue address of Vinnia Realty, its
manager (and of Vinnia Realty's President, Louis Pashman). The
tenant's March, 1984 complaint (prior to the property being sold)
listed the owner as being 4149-55 Kings Highway Associates at P.O.
Box 14067, Church Street Station. Louis Pashman and/or Vinnia
Realty received the copy of the Administrator's order sent to "4149
55 Kings Highway" at that address. The 1985 and 1986 registrations
Docket Number: BB 210274-RO
listed the owner as being 49-55 K-H Associates at 100 Ocean Parkway.
Upon being served with a copy of the complaint at 331 Madison
Avenue, Louis Pashman stated that 4149-55 Kings Highway Associates
no longer existed. However, the current owner's attorney refers to
"4149-55 Kings Highway" as being the current owner and petitioner,
and states that the November 3, 1986 Final Notice to 4149-55 Kings
Highway Associates at P.O. Box 14067 was sent to the current owner.
Louis Pashman and Vinnia Realty received both the tenant's complaint
and the Administrator's order, although asserting that they were not
applicable as the property had been sold. Because "4149-55 Kings
Highway Associates" was at least the name of the owner at the time
Louis Pashman and Vinnia Realty were associated with it (whether or
not it is a name also used by the current owner), Louis Pashman and
Vinnia Realty are responsible in the manner set forth for the
overcharges collected by them prior to the sale of the property on
June 11, 1984. To make this clearer than it was in the
Administrator's order, the Administrator's order is hereby modified
to include Louis Pashman and Vinnia Realty as the prior owner. The
tenant may collect overcharges occurring prior to April 1, 1984 only
from them. The tenant may collect the remaining overcharge of
$1,893.50 ($2,291.18 minus $397.68) from the current owner. The
Commissioner notes that Vinnia Realty is not listed in the current
Manhattan telephone directory.
Because of the possibility that the rents charged were not reduced
after the Administrator's order, the owner is cautioned to adjust
the rent, in leases after those considered by the Administrator, to
amounts no greater than that determined by the Administrator's order
plus any lawful increases, and to register any adjusted rents with
the Administrator's order being given as the reason for the
adjustment. Because of the possibility that the tenant herein may
have vacated by the time that this determination is issued, a copy
of this determination is being mailed to the tenant-in-occupancy.
This order may, upon the expiration of the period in which the owner
may institute a proceeding pursuant to Article seventy-eight of the
civil practice law and rules, be filed and enforced by the tenant in
Docket Number: BB 210274-RO
the same manner as a judgement or not in excess of twenty percent
thereof per month may be offset against any rent thereafter due the
THEREFORE, in accordance with the Rent Stabilization Law and Code,
ORDERED, that this petition be, and the same hereby is, granted in
part and that the District Rent Administrator's order be, and the
same hereby is, modified in accordance with this order and opinion.
The total overcharge collectible from the current owner is $1,893.50
as of August 31, 1986, including excess security of $57.24. The
lawful stabilization rent is $237.50 in the lease ending
September 30, 1986.