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 110290-RO
DRO DOCKET NO.: TC 077896-G
CHIA LIH WU, CHIN - HSIUNG WU, CDR 24,568
LIEN HONG WU PETITIONER :
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW IN PART
The above named petitioner-owners filed a Petition for Administrative
Review against an order of the Rent Administrator 10 Columbus Circlet New
York, New York issued October 7, 1986. The order concerned housing
accommodations known as Apartment 1-F located at 41-14 49th Street,
Sunnyside, New York. The Administrator determined that the tenant had
This case began with tenant filing a rental overcharge complaint on
October 31, 1983. At that time the owner was Fook Ming Cho. The building
was subsequently sold to Julio Ayon. A complete rental history was not
provided to the Administrator. The owner was judged to be in default.
The Administrator utilized the procedures based on Section 42A of the
former Rent Stabilization Code. The lawful stabilization rent was
calculated at $222.67 with total overcharges found to equal $7757.85
including treble damages after April 1, 1984 and excess security.
Petitioner bought the building October 9, 1985.
Petitioners allege numerous changes of ownership of the building and the
fact that they were not required to provide a rent history before February
1980. The petition is granted in part subject to the directives of the
Appellate Division, Second Department.
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
DOCKET NUMBER: BB 110290-RO
March 31, 1984. (See Section 2526.1(a)(4) 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, 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
lave 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., 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 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.
Since in the instant 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.
Petitioner has argued that the rent as of April 1, 1980 is correct. JRD
mandates that the Commissioner accept it as such. The sole remaining
inquiry regards overcharges after that period. Attached hereto is a rent
chart which will set forth the proper rent calculations.
The Commissioner notes that no increase was given for Chang's lease when
computing the vacancy rent for the complaining tenants. DHCR policy
provides that tenancies that last less than three months cannot increase
the legal rent for an apartment. In this case Chang's lease commenced
within three months of Lichtman's lease. Further, pursuant to DHCR policy
that an owner may not compound guideline increases for two or more leases
DOCKET NUMBER: BB 110290-RO
commencing during the same guidelines period, the Lichtman's vacancy lease
was computed above the June 30, 1980 rent and not above the rents of the
other leases executed during Guideline 12.
The Commissioner has imposed treble damages as the Administrator did below
for all post April 1, 1984 overcharges. Pursuant to 9 NYCRR 2526.1(a)(1)
"Any owner who is found by the DHCR, after a reasonable
opportunity to be heard, to have collected any rent or other
consideration in excess of the legal regulated rent shall be
ordered to pay to the tenant a penalty equal to three times the
amount of such excess, except as provided under subdivision (f)
of this section. If the owner establishes by a preponderance of
the evidence that the overcharge was not willful, the DHCR shall
establish the penalty as the amount of the overcharge plus
interest from the date of the first overcharge on or after April
1, 1984, at the rate of interest payable on a judgment pursuant
to section 5004 of the Civil Practice Law and Rules, and the
order shall direct such a payment to be made to the tenant."
The commissioner has examined the overcharges and finds that the owner has
not overcome the burden of proving non-willful conduct. Even now if the
owners were entitled to collect the guidelines increase for tenant Huang,
there are still examples in the record of unexplained overcharges. Absent
any explanation for the overcharges, the Commissioner is bound to apply
The current owner has stated that it took title to the subject premises on
October 9, 1985. According to Section 2526.1 of the new Rent
Stabilization Code, a current owner is responsible for all overcharges
collected on or after April 1, 1984. The former owner, however, is
jointly and severally liable for overcharges collected between April 1,
1984 and September 12, 1984. The petitioner liability is $743.94 (123.99
x 2 months x 3).
If the current owner has complied with the order of the Administrator and
arrears are due and owing based on the present determination, the
petitioner is directed to allow the tenant to pay off said arrears in
twelve equal monthly installments. Should the tenant vacate the
apartment, or have previously vacated, said arrears shall be due and
payable immediately. This order may, upon the expiration of the period in
which the owner may institute a proceeding pursuant to Article 78 of the
CPLR, be filed and enforced by the tenant in the same manner as a
THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
ORDERED, that this petition be, and hereby is, granted in part and that
the order of the Rent Administrator be, and hereby is, modified in
accordance with this order and opinion.