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
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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
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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
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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
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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:
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ELLIOT SANDER
Deputy Commissioner
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