OFFICE OF RENT ADMINISTRATION
                                    GERTZ PLAZA
                              92-31 UNION HALL STREET
                              JAMAICA, NEW YORK 11433

     APPEAL OF                              DOCKET NO.: BD-410289-RO
                                            DRO DOCKET NO.: L-3116344-RT
       FLATBUSH K. ASSOCIATES,                              CDR 29711
                           PETITIONER    : 


     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 

     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

     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.


                                             ELLIOT                      SANDER
                                          Deputy Commissioner

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