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-410289-RO
:
DRO DOCKET NO.: L-3116344-RT
FLATBUSH K. ASSOCIATES, CDR 29711
PETITIONER :
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW,
AND MODIFYING ADMINISTRATOR'S ORDER
On April 13, 1987 the above named petitioner-owner filed a Petition for
Administrative Review against an order issued on April 2, 1987 by the
District Rent Administrator, 10 Columbus Circle, New York, New York
concerning housing accommodations known as Apartment 19G at 330 Third
Avenue, 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 42A 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 and a Fair Market Rent Adjustment Application by
the tenant, in which he stated he had commenced occupancy on November 1,
1980 at a rent of $424.98 per month.
On April 4, 1984 and April 5, 1984 the owner was sent letters
(respectively addressed to "Flatbush K. Associates, Kellner & Livingston,
Inc.," and "Kellner & Livingston," both at 2 Hamilton Avenue in New
Rochelle) notifying it that an overcharge complaint had been filed prior
DOCKET NUMBER: BD-410289-RT
to April 1, 1984, and that a copy would be mailed when docketing had been
completed. (The complaint was actually mailed to the owner September 4,
1986.) The letters warned that the owner would be required to produce
rent records from May 31, 1968, or June 30, 1974, or the date that the
apartment became subject to rent stabilization, since Sections 19 and 20
of Chapter 403 of the Laws of 1983 had continued the Rent Stabilization
Code and all rules and regulations in effect until modified or abrogated
by the DHCR. The letters also warned that failure to produce rent records
might result in fines and in the stabilization rent being determined by a
DHCR procedure.
On November 26, 1984 the owner was sent a letter notifying it that a Fair
Market Rent Adjustment Application had been filed, and that it was
required by law to retain all records back to June 30, 1974 or the date
the apartment became subject to rent stabilization. In reply, the owner
submitted a copy of the 1984 registration.
In May, 1986 the tenant advised that he had bought his apartment on August
1, 1984.
In October, 1986 the owner submitted an answer claiming a base date of
March 31, 1980, on the grounds that it was not notified that the tenant
had filed a complaint until November, 1984; that it had presumed that rent
records prior to April 1, 1980 were not necessary; that because of this
and the tenant's purchase of his apartment on August 1, 1984 such records
were no longer available; and that in another case the DHCR decided in its
favor where pre- April 1, 1984 rent records had been disposed of. With
its answer the owner submitted a rent ledger listing tenancies from 1978,
and showing the security deposit as having been refunded to the tenant
when his lease was cancelled.
On October 28, 1986 (crossing the owner's answer in the mail) the owner
was sent a Final Notice of Pending Default, which stated in substance that
unless leases from June 30, 1974, or a proven later base date, were
submitted within 20 days, certain DHCR procedures would be used to
establish the lawful stabilized rent. In reply, the owner resubmitted its
answer.
In an order issued on April 2, 1987 the District Rent Administrator,
utilizing the DHCR default procedures, found that the owner had
overcharged the tenant $3,746.06 (including $96.06 excess security,
although the owner no longer had any security deposit after the tenant
bought his apartment ) as of July 31, 1984, the last day the tenant rented
his apartment.
In this petition, the owner contends in substance that it did submit a
full rental history, and that it was not notified of the tenant's
overcharge complaint until September, 1986. The owner also makes the same
contentions, and submits the same documents, as in its October, 1986
answer.
In answer, the tenant asserts in substance that the owner did not provide
a rental history to 1974 as required, and questions why the owner
discarded leases yet kept a rent ledger sheet.
DOCKET NUMBER: BD-410289-RT
The Commissioner is of the opinion that this petition should be denied,
and that the Administrator's order should be modified.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 the 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, in the determination of rent overcharge complaints filed with
the CAB prior to April 1, 1984 by applying the law in effect at the 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.S2d 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.
DOCKET NUMBER: BD-410289-RT
Since in the present case the subject dwelling unit is located in the
First Department, the DHCR requires complete rent records. The owner has
submitted rental records only from 1978. Since the owner submitted
evidence, in arguing that the tenant was not entitled to make a Free
Market Rent Adjustment Application, that the subject building was never
subject to Rent Control, this is not a full rental history, so the
Administrator was warranted in using established procedures to set the
lawful stabilization rent.
The present situation is not the same as in the case (Docket No. ARL
08444-U) cited by the owner. In that case the owner was not notified of
the complaint until November, 1984, and it discarded rent records for
periods prior to April 1, 1980. In preparing its appeal it came across a
rent card providing a complete rental history from 1974. Such evidence
would normally not be accepted when submitted for the first time on
appeal. According to the Commissioner, because of the owner's reasonable
belief that it was no longer required to maintain rent records prior to
April 1, 1980, "the owner's failure to submit a complete rental history to
the Administrator [emphasis added] is excused. The Commissioner will
consider the data contained on the rent card. The Commissioner wishes to
emphasize that the owner has not been excused from submitting a rental
history from before April 1, 1980 but only permitted to submit a complete
rental history on administrative appeal." In the present case the owner
was sent two letters in April, 1984 (rather than November as in the cited
case), well before the apartment was sold, informing it that a complaint
had been filed and that a rental history from 1974 or a later proven base
date would be required. The rent ledger sheet submitted by the owner does
not constitute a complete rental history, unlike the situation in the
cited case. Even the main point of the cited case (that a rental history
would be accepted for the first time on appeal where the owner was not
notified of the complaint until after it had discarded rent records for
periods prior to April 1, 1980 based on the assumption that the Omnibus
Housing Act of 1983 made it unnecessary to retain all records) is not
relevant in the present case, as the (incomplete) rental history submitted
on appeal was submitted in the proceeding before the administrator. Even
if the owner had not been sent two letters in April, 1984 the cited case
would not provide any support for the contention that rent records have to
be provided only from April 1, 1980.
The $3,746.06 overcharge found by the Administrator included excess
security of $96.06. At the time the order was issued, however, the owner
had not had any security deposit of the tenant's for nearly three years.
Since the $96.06 in excess security was returned to the tenant when he
bought his apartment, that amount should be subtracted from the amount of
overcharge found by the Administrator.
This order may, upon the expiration of the period in which the owner may
institute a proceeding 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.
THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
DOCKET NUMBER: BD-410289-RT
ORDERED, that this petition be, and the same hereby is, denied and that
the District Rent Administrator's order be, and the same hereby is,
modified in accordance with this Order and Opinion. The total overcharge
is $3,650.00 as of July 31, 1984.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
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