BC 210392 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.: BC 210392 RO
EAST REALTY COMPANY, DRO DOCKET NO.: 7040
TENANT: GINA BACON
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
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
The Administrative Appeal is being determined pursuant to the
provisions of Section 2526.1(a) of the current Rent Stabilization
The issue herein is whether the Rent Administrator's order was
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.
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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
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
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
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
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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,
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.
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner