OFFICE OF RENT ADMINISTRATION
                                    GERTZ PLAZA
                              92-31 UNION HALL STREET
                              JAMAICA, NEW YORK 11433

     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    : 


     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
     been overcharged.

     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 law.

     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.

                                             ELLIOT SANDER
                                          Deputy Commissioner

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