BC 210392 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

          ------------------------------------X 
          IN THE MATTER OF THE ADMINISTRATIVE   ADMINISTRATIVE REVIEW
          APPEAL OF                             DOCKET NO.:  BC 210392 RO


                    EAST REALTY COMPANY,        DRO DOCKET NO.: 7040

                                                TENANT: GINA BACON            
                   
                                    PETITIONER    
          ------------------------------------X                             


            ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
                                       IN PART
                                         AND
                         MODIFYING THE RENT ADMINISTRATOR'S ORDER

          On March 25, 1987 the above-named petitioner-owner filed a Petition 
          for Administrative Review against an order issued on February 18, 
          1987, by a Rent Administrator, concerning the housing 
          accommodations known as 159 Eastern Parkway, New York, Apartment 
          No. 2J wherein the Rent Administrator determined that the owner had 
          charged the tenant an amount in excess of the fair market rent 
          level.
               
          The Administrative Appeal is being determined pursuant to the 
          provisions of Section 2526.1(a) of the current Rent Stabilization 
          Code.

          The issue herein is whether the Rent Administrator's order was 
          warranted.

          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 on June 25, 
          1984 of an objection to the registration including a fair market 
          rent appeal and an overcharge complaint.

          The Administrator served the complaint on the owner, noting that it 
          was a complaint of general rent overcharge.

          In response, the owner submitted rent records documenting the rent 
          history for the subject apartment dating back to June 1, 1981.  By 
          subsequent correspondence dated February 12, 1986, the owner 
          submitted a copy of a file card containing a rent ledger for the 
          subject apartment for the period from June 1978 to April 1980, 
          which indicated a rent of $239.11 in April 1980.  It appears that 
          this submission did not reach the Administrator's file prior to 
          issuance of the Administrator's order.







          BC 210392 RO


          In all further communications, the Administrator failed to inform 
          the owner that the tenant's complaint was being processed as a fair 
          market rent appeal.  The owner was never specifically requested to 
          submit the DC-2 notice and proof of service on the initial 
          stabilized tenant by certified mail.

          In Order No. 7040, issued on February 18, 1987, the Rent 
          Administrator determined that the fair market rent for the prior 
          tenant effective June 1, 1981 was $207.75, resulting in an initial 
          legal stabilized rent of $258.44 for the subject tenant.  As a 
          result, the tenant paid excess rent of $5,178.72 from her initial 
          tenancy in November, 1983 through October 31, 1986.

          In its petition, the owner contends that the Administrator had 
          incorrectly processed the case as a fair market rent appeal, but 
          that the subject tenant was ineligible for a fair market rent 
          appeal because the initial stabilized tenant had been served with 
          a DC-2 notice in November 1974 and did not file a timely appeal.

          The aforementioned DC-2 notice, proof of service and the remaining 
          leases are enclosed with the petition.  The owner then submits its 
          own calculations which document that there was a total of only 
          $507.49 in overcharges through October 31, 1988, after the 
          inclusion of all applicable increases under the guidelines, and 
          that this amount already has been credited to the tenant's account.  
          The owner contends, therefore, that its full credit of overcharges 
          to the tenant is evidence of its good faith and that the 
          overcharges were not willful.

          The tenant did not answer the petition.

          The Commissioner is of the opinion that the owner's petition should 
          be granted in part, and that the Administrator's order should be 
          modified.

          Section 2522.3 of the Rent Stabilization Code provides that a fair 
          market rent appeal application may be filed by the tenant of an 
          apartment which was subject to the City Rent Law on December 31, 
          1973.  Where the owner served the tenant with a notice of initial 
          legal regulated rent ("DC 2") the fair market rent appeal must be 
          filed within ninety days of service of such notice by certified 
          mail.

          Division of Housing and Community Renewal's (DHCR's) records 
          indicate that the subject apartment was decontrolled in November 
          1974.  Inasmuch as the owner was never notified by the 
          Administrator that the tenant's complaint was being processed as a 
          fair market rent appeal and was never requested to submit a DC-2 
          notice and proof of service, this documentation will be accepted on 
          administrative appeal.  Since the first stabilized tenant was 
          served with a DC-2 notice and failed to file a fair market rent 
          appeal, the complainant tenant is ineligible for a fair market rent 
          appeal.
          The record also establishes that the rent on April 1, 1980 was 
          $239.11, as documented on a rent roll covering that month which was 
          a part of the owner's rent history.  A recalculation of the lawful 
          rent from the base date of April 1, 1980 establishes overcharges in 


          BC 210392 RO

          the amount of $1,130.17 including treble damages and excess 
          security, as documented in a rent calculation chart affixed hereto 
          and made a part hereof.  Although petitioner has submitted its own 
          rent history through November 30, 1988, the Commissioner has 
          limited the computation of overcharges to the same period as was 
          covered in the Administrator's order.  The owner is advised to 
          adjust the lawful rent in accordance with this Order and Opinion.

          Section 2526.1(a)(1) of the Rent Stabilization Code provides for 
          the penalty of treble damages on overcharges unless the owner 
          establishes by a preponderance of the evidence that the overcharge 
          was not willful.  The Division's position on the application of 
          treble damages upon the finding of a rent overcharge was clairified 
          in Policy Statement 89-2 which describes, inter alia, certain 
          circumstances in which the burden of proof in establishing lack of 
          willfulness will be deemed to have been met.  One such situation is 
          where an owner adjusts the rent on his or her own within the time 
          afforded to interpose an answer to the proceeding and submits proof 
          to the DHCR that he or she has tendered, in good faith, to the 
          tenant a full refund of all excess rent collected, plus interest.  
          Since in the instant case the owner did not credit the tenant for 
          overcharges or adjust the rent until after the issuance of the 
          order, the owner does not qualify for the exception listed in 
          Policy Statement 89-2 cited above.

          Finally, it is noted that the owner claims to have given "full 
          credit" to the tenant in the amount of $507.49, and that the tenant 
          has not denied this claim.  Therefore a credit in the amount is 
          being deducted from the net overcharge due the tenant.

          THEREFORE, in accordance with the Rent Stabilization Law and Code, 
          it is

          ORDERED, that this petition be, and the same hereby is, granted in 
          part; and that the Administrator's order be, and the same hereby 
          is, modified in accordance with this Order and Opinion.





          ISSUED:

                                                  ------------------------
                                                  JOSEPH A. D'AGOSTA
                                                  Acting Deputy Commissioner
           





    

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