Docket Number: BL 410264-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.: BL 410264-RO
:
MAUTNER & GLICK CORP., DRO DOCKET NO.: 35963
PETITIONER :
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ORDER AND OPINION ON RECONSIDERATION GRANTING PETITION
FOR ADMINISTRATIVE REVIEW,IN PART AND REMANDING
PROCEEDING TO THE RENT ADMINISTRATOR
On December 15, 1987, the above-named petitioner-owner filed a
Petition for Administrative Review of an order issued on November
10, 1987 by a Rent Administrator, concerning the housing
accommodations known as Apartment 1E, 325 East 93rd Street, New
York, New York, wherein the District Rent Administrator determined
the fair market rent pursuant to the special fair market rent
guidelines promulgated by the New York City Rent Guidelines Board
for use in calculating fair market rent appeals.
Subsequent to receiving a letter from the owner, dated February 7,
1989, wherein the owner advised the Division that it was withdrawing
its petition following a settlement of the issues with the
complaining tenant, as documented in an enclosed letter from the
tenant, the Commissioner issued an Order and Opinion Terminating the
Proceeding, dated May 22, 1989, as based on the owner's withdrawal
of its petition.
On June 1, 1989, the owner sent a Request for Reconsideration to the
Division wherein the owner proposed that the prior dismissal of the
owner's original petition in the Order and Opinion of May 22, 1989
was incorrect. The owner claimed therein that the letter of
February 7, 1989 had stated that the PAR should not be withdrawn
unless this was in conjunction with the withdrawals of the tenant's
duplicate complaint then being processed as well as the underlying
complaint, the revocation of the Administrator's order and the
reinstatement of the rent, and that since the Order and Opinion did
not so order those actions, the owner was aggrieved without cause.
In an Order issued on June 8, 1989, the Commissioner granted
reconsideration and reopened the Order and Opinion of May 22, 1989
due to an irregularity in a vital matter. The Commissioner
determined that since the owner had properly stated the conditions
upon which the withdrawal of its petition would depend and that the
Docket Number: BL 410264-RO
tenant had registered its agreement to them, it was improper for the
PAR Order to merely dismiss the owner's PAR without ordering those
conditions. The Reopening Order further stated that, should the
Commissioner, on reconsideration, not approve the aforementioned, or
any settlement of the matter by the owner and tenant, the appeal
would be considered on the merits.
Insofar as there has been no further communication from the parties
advising the Division of a settlement, the Commissioner herein
proceeds with a determination of the issues raised by the
administrative appeal.
It is noted that the tenant's complaint, which had been filed under
Docket Number L-000014-R, has been terminated by the Rent
Administrator in an order issued on October 5, 1990 as duplicative
of the proceeding hereunder review.
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.
This proceeding was originally commenced by the fili g by the co-
tenants of a rent overcharge complaint on July 30, 1984. The
tenants took occupancy pursuant to a lease commencing on April 1,
1984 and expiring on July 31, 1985 at a rental of $750.00 per month.
The complaint stated that the tenants had been told the prior tenant
had paid less than $100.00 per month rent, and there had been few
alterations. This complaint was given Docket No. L-000014-R.
On September 13, 1984 one of the co-tenants, Dr. Caryn Bradland,
filed an objection to the initial registered rent of $750.00 per
month which was given Docket No. 35963. The objection form was also
marked as an overcharge complaint, but was not served on the owner
at that time.
The owner answered the complaint under Docket No. L-000014-R, on
January 14, 1985 that the complainants were the first rent
stabilized tenants subsequent to the decontrol of the apartment on
March 1, 1984, and that the initial rent was related to the
apartment's fair market value, rather than the rent controlled rent.
The owner also stated that the apartment had been equipped with new
kitchen equipment, new bathroom equipment and new closets. Enclosed
with the answer was a copy of the R-42 establishing the decontrol of
the apartment and the initial registration statement.
The tenants replied that the rent of the apartment did not reflect
the fair market rent because of numerous complaints they had about
inadequate conditions.
On August 22, 1985 the owner responded that the inadequate
conditions mentioned in the tenants' reply had been corrected and
that the initial rent of $750.00 was still "fair" for a five room
apartment on the upper East Side of Manhattan.
Docket Number: BL 410264-RO
On November 13, 1986 the owner was served with a copy of the
tenants' objection to the initial registered rent. An accompanying
form indicated that the complaint was related to rent overcharges.
There were two spaces on the check-box form to indicate a Fair
Market Rent Appeal, but both were unchecked.
On August 26, 1987 the Administrator requested that the owner submit
the complete MCR and MBR records of the subject apartment, the
Registration Card and the R-42 form and fuel cost adjustment
records in order to process the tenant's overcharge complaint on
Docket No. L-000014-R. The owner promptly submitted all of the
documentation cited in the Administrator's request.
In an order issued under Docket Number 35963, the Rent Administrator
determined that the tenants had been charged in excess of the fair
market rent in the total amount of $28,716.48, including excess
security, through October 31, 1987. Specifically, it was found that
the owner submitted no evidence on the rents for similar housing
then prevailing in the area and, also, that the owner had been
denied an MBR increase because of violations in the building. As a
result, the 1982 MCR of $101.01 was increased by 20%, resulting in
an initial stabilized rent of $121.21. Subsequent guidelines
increases for each successive lease term brought the lawful rent to
$136.83 as of May 1, 1986.
In its petition, dated December 15, 1987, the owner contends that
the Administrator had erroneously processed the tenant's overcharge
complaint as a fair market rent appeal without advising the owner of
this change, and without affording him the opportunity to submit
data of comparable rents in the area for consideration in
determining the initial stabilized rent. The owner also notes that
the tenants' other complaint, which is still being processed, was
also never designated as a fair market rent appeal by the
Administrator. The owner contends that he complied with the request
for the rent paid by the last rent-controlled tenant, and the MBR,
but was never notified, in turn, that the Administrator was treating
the complaint as a challenge to the fair market rent. This error
deprived the owner of the opportunity to submit comparability data
and otherwise respond to that issue, as has been the DHCR's practice
in all previous fair market rent appeal proceedings. The owner also
requests that the initial stabilized rent cannot be challenged as a
fair market rent appeal because it was only converted to that
proceeding after the expiration of the 90-day statute of limitations
for objecting to the initial registered rent, and is thus untimely.
The Commissioner is of the opinion that this petition should be
granted in part and that the proceeding be remanded to the Rent
Administrator for redetermination.
The owner's first contention, that the tenant's overcharge complaint
cannot be converted into a fair market rent appeal because it was
never designated as such by the tenant, is not correct. Although
the complaint never specifically claims that the tenants' initial
stabilized rent is excessive, this is more than likely due to their
never having been served with the DC-2 notice or otherwise informed
that they were the first stabilized tenants. In fact, the tenants
only assert that theirs was not a "fair market rent" after the owner
Docket Number: BL 410264-RO
mentioned that they were the first tenants after the decontrol of
the apartment in the owner's answer of January 14, 1985.
Furthermore, the Commissioner has previously held that such omission
in the complaint is not "materially defective", and permits
reframing (Accord. BE 210386-RO). Finally, the owner's claim that
the appeal is time-barred in that it only became a fair market rent
appeal by conversion more than 90 days after service of the
registration, which is prohibited by Section 2522.3(b) of the
current Code, is without merit. Therefore, the Commissioner finds
that the Administrator acted properly in processing the case as a
fair market rent appeal.
However, the owner is correct in claiming that the Administrator's
failure to properly notify him of the documentation requirements
and processing data for fair market rent appeals deprived him of the
opportunity to submit such information that is afforded him by the
Rent Stabilization Code.
Section 2522.3 of the current Rent Stabilization Code provides in
pertinent part, that fair market rent adjustment applications are to
be determined by the use of special fair market rent guidelines
orders promulgated by the Rent Guidelines Board, and by a comparison
with the rents generally prevailing in the same area for
substantially similar housing accommodations. In utilizing such
comparability data for fair market rent appeal cases filed after
April 1, 1984, it is the DHCR's procedure to accept, where
validated, (1) the legal regulated rents for which the time for
filing a Fair Market Rent Appeal has expired and no such appeal is
pending, or which has been determined pursuant to a Fair Market Rent
Appeal, as based on a lease commencing within a four-year period
prior to, or a one-year period subsequent to the commencement of the
initial lease period of the premises; or (2) at the owner's option,
the market rents in effect for comparable housing on the date of the
initial lease for the subject-premises.
In the instant case, an examination of the record reveals that the
owner was not afforded an opportunity to provide rental data for use
in either of the comparability options outlined above.
Specifically, it has been DHCR practice for the owner to be sent a
Schedule form on which the comparability data outlined above may be
entered and submitted, as well as a notice of instructions and
rights of appeal. This was not done in the instant case.
Therefore, in recalculating the fair market rent, the Administrator
is directed to afford the owner an opportunity to submit
comparability data in accordance with the provisions of Section
2522.3(e) of the Rent Stabilization Code (effective May 1, 1987).
It is noted that the remaining tenant in the subject apartment had
been included on the lease as a lawful co-tenant with the original
complainant, but has never been made a party to the proceedings.
Docket Number: BL 410264-RO
The Administrator is directed to add the current tenant as
complainant for the period in which she shared tenancy with the
original complainant, and for all subsequent periods included in its
determination.
THEREFORE, in accordance with the Rent Stabilization Law and Code,
it is
ORDERED, that this petition be and the same hereby is granted to the
extent of remanding this proceeding to the District Rent
Administrator for further processing in accordance with this Order
and Opinion. The automatic stay of so much of the District Rent
Administrator's order as directed a refund is hereby continued until
a new order is issued upon remand. However, the Administrator's
determination as to the rent is not stayed and shall remain in
effect, except for any adjustments pursuant to lease renewals, until
the Administrator issues a new order upon remand.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
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