DOC. NO.: BD 210470-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. BD 210470-RO
EAST REALTY, : RENT ADMINISTRATOR'S
PETITIONER : DOCKET NOS. TC 055980G
------------------------------------X CDR 29,969
TENANT: AARON SWAN
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
On April 30, 1987, the above-named petitioner-owner filed a Petition
for Administrative Review against an order of the Rent Administrator
issued April 14, 1987. The order concerned housing accommodations
known as Apt. 5A located at 360 Clinton Avenue, Brooklyn, New York.
The Administrator found that the owner had not submitted a complete
rental history and computed an overcharge at $2581.88 including
excess security.
The Commissioner has reviewed the record and carefully considered
that portion relevant to the issues raised by this appeal.
The tenant commenced this proceeding by filing a rent overcharge
complaint on August 17, 1981. The tenant alleged he took occupancy
of the apartment on May 1, 1975, pursuant to a two year lease at a
rental of $230.00 per month. The tenant stated that the owner had
refused to show him prior leases and that the owner repeatedly
revised rent increases after the first few payments of each lease
term, claiming he had made an error.
The prior and current owner were served with copies of the
complaint along with a demand for copies of all leases or rent
records from the base date.
In response, the owner stated that the apartment was decontrolled
in April 1973. Copies of leases dating from May 1, 1975 were
submitted. Based on the incomplete rental history the
Administrator adjudged a default and utilized procedures developed
pursuant to Section 42A of the Rent Stabilization Code. The
DOC. NO.: BD 210470-RO
Administrator calculated a total overcharge of $1581.88 including
excess security. The subject building was subsequently converted
to cooperative ownership and the tenant purchased his apartment
on January 5, 1984.
On appeal, the current owner claimed that it bought the building
in 1981 and vigorously searched the records for additional rent
records. It also requested that the prior owner conduct a further
search of its records. These searches turned up additional
information.
The owner contended that the additional information establishes
that the tenant was not overcharged. In response to the petition,
the tenant questions what the rent controlled rent was, how the
first stabilized rent was computed and why the rent was increased
from $165 to $200 in September 1974.
After a careful review of the evidence in the record the
Commissioner is of the opinion that the petition should be granted
pursuant to the decision of the Appellate Division in JRD Mgmt v.
Eimicke.
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 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
DOC. NO.: BD 210470-RO
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), in
cases involving rent overcharge complaints filed prior to April 1,
1984.
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 leave to appeal to the Court of
Appeals denied (Court of Appeals, N.Y.L.J., Nov. 24, 1989, p. 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
rather than the law in effect at the time of the filing of the
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.
A review of the record reveals that the owner did submit a rental
history sufficient to satisfy the requirements of JRD and pursuant
to that rental history, the Administrator's finding of overcharge
must be revoked. The tenant's initial rent of $230.00 per month
effective May 1, 1975 was lawfully increased in accordance with
applicable guidelines increases for each subsequent renewal lease.
DOC. NO.: BD 210470-RO
If the current owner has already complied with the Administrator's
order and there are arrears due and owing to the owner as a result
of the present determination such arrears are payable immediately,
since the complainant has since purchased the apartment.
THEREFORE, pursuant to the Rent Stabilization Law and Code, it is
ORDERED, that this Petition be, and the same hereby is granted and
that the Rent Administrator's order be, and the same hereby is
revoked.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
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