BD 410162 RT

                                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.: BD 410162 RT

           David Stimpson,                   DRO DOCKET NO.: L 3116582 R

                                                                              
                               PETITIONER    
      ------------------------------------X                             


          ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
                                     IN PART

      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 
      overcharge complaint.  

      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 
      damages.

      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 
      ($5.24).

      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.


      ISSUED:





                                                                  
                                      JOSEPH A. D'AGOSTA
                                      Acting Deputy Commissioner




                 


























          BD 410162 RT












    

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