BD 410269 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
          APPEAL OF                           ADMINISTRATIVE REVIEW
                                              DOCKET NO.:  BD 410269-RO
             HERMAN REALTY CORPORATION,
                                              DRO DOCKET NOS.: L-3113028-RT
                                                               CDR 29336
                                              TENANT:  SANDRA HERLITSCHEK
                                 PETITIONER
          ----------------------------------X


            ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
                                       IN PART

          On April 13, 1987   the  above  named  petitioner-owner  filed  a
          Petition for Administrative Review against  an  order  issued  on
          March 9, 1987 by the District  Rent  Administrator,  10  Columbus
          Circle, New York,  New  York  concerning  housing  accommodations
          known as Apartment 2C at 322 East  82nd  Street,  New  York,  New
          York wherein the District Rent Administrator determined that  the
          owner had overcharged the tenant.

          The Commissioner notes that this proceeding was  filed  prior  to
          April 1, 1984.  Sections 2526.1(a)(4) and 2521.1(d) of  the  Rent
          Stabilization  Code  (effective  May  1,  1987)  governing   rent
          overcharge  and  fair  market  rent  proceedings   provide   that
          determination of these matters be based  upon  the  law  or  code
          provision  in  effect  on  March  31,  1984.   Therefore,  unless
          otherwise  indicated,  reference  to   Sections   of   the   Rent
          Stabilization Code (Code) contained herein are  to  the  Code  in
          effect on April 30, 1987.

          The  issue  in  this  appeal  is  whether   the   District   Rent
          Administrator's order was warranted.

          The applicable sections of the Law  are  Section  26-516  of  the
          Rent Stabilization Law, Section 2526.1(a)  of  the  current  Rent
          Stabilization  Code,  and  Section  60   of   the   former   Rent
          Stabilization Code.

          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 in  March,
          1984 of a rent overcharge complaint by the tenant, in  which  she
          stated that she had commenced occupancy on November 1, 1974 at  a
          rent of $260.00 per  month.   One  of  the  documents  which  she
          submitted was a lease renewal offer dated July 13, 1979 to extend 






          BD 410269 RO
          her lease expiring October 31, 1978.

          The owner was served  with  a  copy  of  the  complaint  and  was
          requested to submit rent records to prove the lawfulness  of  the
          rent being charged.   In  answer  to  the  complaint,  the  owner
          submitted the base date lease, which ended just before the tenant 
          commenced occupancy.

          In Order  Number  CDR  29336,  the  District  Rent  Administrator
          determined that the tenant had been overcharged in the amount  of
          $1,694.41 as of August 31, 1986, and directed the owner to refund 
          such overcharge to the tenant as well as to reduce the rent.  Due 
          to an arithmetical error the summary of overcharges at the top of 
          the first page of the rent calculation chart  incorrectly  listed
          the total overcharge as being $1,080.17.

          In this petition, the owner contends in substance that there  was
          no rent overcharge in  that  the  District  Rent  Administrator's
          order failed to take into account the  fact  that  there  was  no
          lease from November 1, 1978 until August 31, 1979, and  that  the
          rent was not increased during that period.

          The tenant did not submit an answer, although give an opportunity 
          to do so.

          The Commissioner is of the opinion that this petition  should  be
          granted in part.

          Section 60 of the former  Rent  Stabilization  Code  requires  an
          owner to offer a renewal lease between 120 and 150 days prior  to
          the expiration of the current lease.  If the  owner  had  made  a
          timely offer to renew the lease  expiring  October  31,  1978  it
          would have been entitled to charge an increase of 6 1/2% for a 2 
          year renewal lease under Guidelines 10  and  10a.   By  not  even
          offering a lease until July 13, 1979  the  owner  charged  a  12%
          increase for a 2-year renewal  lease  under  Guideline  11.   The
          owner claims that the tenant did not  actually  pay  the  $308.00
          rent  in  that  lease  until  September  1,   1979,   while   the
          Administrator's  calculations  assumed  that  the   lease   began
          immediately upon the expiration of the prior  one  and  that  the
          tenant paid $308.00 from November 1, 1978.



          The Commissioner will not allow the owner to reap a windfall as a 
          result of violating  Section  60.   While  Section  60  does  not
          provide  a  remedy  in  this  case,  the  Commissioner  finds  it
          appropriate to look at an analogous provision in the current Code 
          to fashion a remedy.  Section  2523.5(c)  provides  in  substance
          that, where an owner has failed to  make  a  timely  offer  of  a
          renewal lease, the tenant may choose  to  have  the  lease  begin
          either:  1)  when it would have begun had the offer been  timely,
          or 2)  the first rent payment date occurring at  least  120  days
          after the renewal lease is actually offered.  

          In either case the Guidelines rate shall be no greater  than  the
          rate in effect on the commencement date of the lease for which  a
          timely offer should have been made.  If the second variant of the 
          lease commencement date is applied to the present case (since  it






          BD 410269 RO
          would  be  most  advantageous  to  the  tenant  and  would   thus
          presumably be chosen by her), the tenant would  continue  to  pay
          $275.00 as a month-to-month tenant until November 30,  1979,  and
          then pay $292.88 (including the 6 1/2% increase allowed for a  2-
          year lease by Guidelines 10 and 10a, applicable to the date  that
          a timely-offered renewal lease would  have  commenced)  beginning
          December 1, 1979 (141 days after  the  owner  offered  a  renewal
          lease) through August 31, 1981.  (The modified  lease  is  for  a
          period of one year and nine months, to  avoid  the  necessity  of
          restructuring  the  dates  of  the  several  subsequent  leases.)
          Through misunderstanding the date that the renewal  lease  began,
          the Administrator essentially calculated the first variant, using 
          a 6 1/2% increase to $292.88 from November 1, 1978 to October 31, 
          1980, and then holding the lawful rent at $292.88 through  August
          31, 1981 by assuming that the complainant  was  a  month-to-month
          tenant.  (While the Administrator's rent calculation  chart  does
          not mention the period from November 1, 1980 to August 31,  1981,
          it calculates 34 months of overcharge  for  the  24-month  period
          prior  to  that  10-month  period.)   While   the   Administrator
          incorrectly calculated the tenant as paying $308.00  rather  than
          $275.00 for a 10 month period, the fact  that  the  Administrator
          froze the lawful rent at $292.88 for 10 months,  rather  than  at
          $275.00 as has been done by  using  the  second  variant  of  the
          Section 2523.5(c) procedure, results in  this  order  finding  an
          overcharge that is only slightly reduced from the  one  found  by
          the Administrator.

          Because this order, in determining  the  owner's  appeal  of  the
          Administrator's order, considers only  the  same  period  through
          August 31, 1986 considered  in  the  Administrator's  order,  the
          owner is cautioned to adjust the rent in leases after  that  date
          to amounts no greater than that determined by this order plus any 
          lawful increases, and to register any adjusted  rents  with  this
          order being given as the reason for the adjustment.   Because  of
          the possibility that the tenant herein may have  vacated  by  the
          time  that  this  determination  is  issued,  a  copy   of   this
          determination is being mailed to the tenant-in-occupancy.


          It appears that there has been a recent change  in  ownership  of
          the subject premises (at least as defined in Section 2520.6[i] of 
          the current Rent Stabilization  Code,  which  includes  "[a]  fee
          owner...or any other person or entity receiving  or  entitled  to
          receive  rent  for  the  use  or  occupation   of   any   housing
          accommodation, or an agent  of  any  of  the  foregoing..."   The
          Commissioner notes that, while  overcharges  collected  prior  to
          April 1, 1984  are  the  responsibility  of  the  owner  actually
          collecting  them.   Section  2526.1(f)  of   the   current   Rent
          Stabilization Code makes a current owner  jointly  and  severally
          liable with the former  owner  collecting  them  for  overcharges
          collected on and after April 1, 1984.  In other words, the tenant 
          may collect the $970.56 overcharge occurring before April 1, 1984 
          only from Herman Realty Corporation.  The overcharge occurring on 
          and after April 1, 1984  may  be  collected  either  from  Herman
          Realty Corporation, or from the current owner, or  in  part  from
          each.  The excess security may be collected only from the current 
          owner, since it is liable for the security deposit.

          This order may, upon the expiration of the period  in  which  the






          BD 410269 RO
          owner may institute a proceedi g  pursuant  to  Article  Seventy-
          Eight of the Civil Practice Law and Rules, be filed and  enforced
          by the tenant in the same manner as a judgment or not  in  excess
          of twenty percent thereof per month may  be  offset  against  any
          rent thereafter due the owner.

          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 District Rent Administrator's order be,  and
          the same hereby is, modified in accordance with  this  Order  and
          Opinion.  The  lawful  stabilization  rents  and  the  amount  of
          overcharge are set forth on the attached rent calculation  chart,
          which is fully made part of this order.   The  total  overcharge,
          including excess security of $18.96, is $1,593.63  as  of  August
          31, 1986.                

          ISSUED:

                                                  ------------------------
                                                  ELLIOT SANDER
                                                  Deputy Commissioner
           
             
    

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