BD 410162 RT
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.: BD 410162 RT
David Stimpson, DRO DOCKET NO.: L 3116582 R
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
On April 23, 1987, the above-named tenant filed a petition for
administrative review of an order issued on March 23, 1987, by a
District Rent Administrator concerning the housing accommodation known
as 530 East 89th Street, New York, New York, Apartment No. 1N, wherein
the Administrator determined that the owner had overcharged the tenant.
The Commissioner has reviewed all of the evidence in the record and has
carefully considered that portion of the record relevant to the issues
raised by the administrative appeal.
This proceeding was commenced on March 30, 1984 by the filing of a rent
The tenant stated that he took occupancy pursuant to a sublease
agreement with the owner on August 15, 1979. On September 1, 1980 he
became the named tenant on a new two year vacancy lease. The tenant
alleged that the prime tenant was "illusory." The basis for this
allegation was the fact that he had never met the prime tenant and that
the prime tenant had vacated the premises within 45 days of signing a
three year vacancy lease.
In his answer, the owner submitted a complete lease history. The owner
acknowledged that a small overcharge occurred but argued that he had
historically undercharged tenants in the subject apartment. Further, he
asserted that he had made improvements for which he assessed no rent
increase. The owner alleged that had he charged the appropriate amounts
no overcharge would have existed.
In the order here under review, the Administrator determined that the
lawful stabilization rent was $931.68 for the two year lease period
beginning September 1, 1985 and that the total overcharges were $383.67
including excess security and interest on overcharges occurring after
April 1, 1984.
In his petition for administrative review, the tenant reasserts his
allegation that the prime tenant was "illusory." Also, he asserts that
the Administrator erred in the calculations by beginning the computation
of the overcharges from the start of his full tenancy rather than the
BD 410162 RT
start of his subtenancy. Further, he alleges that the owner was not
entitled a vacancy allowance at the start of his full tenancy. Finally,
the tenant alleges that the Administrator should have assessed treble
In his answer to the petition for administrative review, the owner
disputes each of the allegations made by the tenant in his petition and
urges affirmation of the Administrator's order.
After careful consideration, the Commissioner is of the opinion that
this petition should be granted in part.
The Commissioner finds that there is insufficient evidence to support
the conclusion that the owner had established an illusory prime tenancy
for the purpose of evading rent regulations. While the factual
circumstances surrounding the signing of the sublease agreement are
unusual, there is insufficient documentation to warrant a finding of an
illusory prime tenancy. No affidavits of neighbors or any other
documentation is submitted to substantiate the tenant's claim.
However, the Commissioner is of the opinion that the Administrator erred
in his calculations. The tenant correctly asserts that the
Administrator should have begun the computation of the overcharges upon
the tenant's occupancy pursuant to the sublease agreement on August 15,
1979. The tenant's claim that it entered the sublease with the prime
tenant is undisputed.
The rent in prime lease agreement was $619.20, while the rent in the
sublease agreement was $650.00. The tenant's rent upon the assumption
of the sublease should have been $619.20. The owner was not entitled to
a vacancy allowance at that point. Section 2525.6(b) of the Rent
Stabilization Code states that the rent paid by a subtenant shall not
exceed the legal regulated rent. Section 2525.6(e) states the owner may
take a vacancy allowance upon his consent to the sublease if the lease
is a renewal lease. In this case, the prime lease agreement was a
vacancy lease and not a renewal lease. Accordingly, the tenant's
initial rent should have been $619.20. However, when the subtenancy
ended and the full tenancy began on September 1, 1980, the owner was
entitled to a vacancy allowance.
Finally, the Commissioner finds that treble damages should have been
assessed by the Administrator. Section 2526.1(a)(1) states that if an
owner has been found to have overcharged a tenant, the amounts
refundable to the tenant shall be trebled. The only exception to this
rule is when the owner has displayed a lack of willfulness. In this
case, the owner acknowledges that a small overcharge occurred. The
owner offers no explanation for this overcharge, nor does he evidence
any effort to correct the overcharge by offering the tenant a refund.
The owner's argument that he has historically undercharged tenants of
the subject apartment is insufficient.
Accordingly, the Administrator's determination of the lawful
stabilization rent of $931.68 is correct.
However, the total overcharges due to the tenant are modified to be
$1,124.26. This amount includes overcharges occurring from August 15,
1979 to August 31, 1980 ($385.00), plus pre April 1, 1984 overcharges as
determined by the Administrator ($190.99), plus post April 1, 1984
BD 410162 RT
overcharges less interest but trebled ($543.03), plus excess security
Because this determination concerns lawful rents only through March 31,
1987, the owner is cautioned to adjust subsequent rents to an amount no
greater than that determined by the Rent Administrator's order plus any
lawful increases, and to register any adjusted rents with this order and
opinion being given as the explanation for the adjustment.
This order may upon the expiration of the period in which the owner may
institute a proceeding pursuant to Article 78 of the Civil Practice Law
and Rules, be filed and enforced as a judgment or not in excess of
twenty percent per month thereof may be offset against any rent
thereafter due the owner.
THEREFORE, in accordance with the provisions of the Rent Stabilization
Law and Code, it is
ORDERED, that this petition for administrative review be, and the same
hereby is, granted in part, and, that the order of the Rent
Administrator be, and the same hereby is, modified in accordance with
this order and opinion. The amount of the rent overcharge through March
31, 1987 is $1,124.26.
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
BD 410162 RT