ADM. REVIEW DOCKET NO.: BD 410554 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 : ADMINISTRATIVE REVIEW
APPEAL OF : DOCKET NO.: BD 410554 RO
CHARLES GAYLE & :
WANDA GAYLE, : D.R.O. DOCKET NOS.:
K-3101791-R/T
PETITIONERS : CDR 29996
------------------------------------X TENANT: ELIZABETH CLAYTON
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On April 28, 1987 the above named petitioner-owners filed a Petition for
Administrative Review against an order issued on April 16, 1987 by the
District Rent Administrator, 10 Columbus Circle, New York, New York
concerning housing accommodations known as Apartment 5C at 156 East 54th
Street, Brooklyn, New York wherein the District Rent Administrator
determined that the owner had overcharged the tenant.
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 and Section 2526.1(a) of the 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 September 15, 1982 at a rent of $350.00 per
month.
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 evidence of decontrol
in 1972, and stated that the prior tenant had commenced occupancy on
January 1, 1982 at a rent of $282.00.
In an order issued on April 16, 1987 the District Rent Administrator,
using established DHCR default procedures, determined that the tenant
had been overcharged in the amount of $5,387.09 as of March 31, 1987,
and directed the owner to refund such overcharge to the tenant as well
as to reduce the rent. The order also directed the prior owner to make
refunds of those overcharges collected by it.
In this petition, the owners contend in substance that they are
ADM. REVIEW DOCKET NO.: BD 410554 RO
enclosing all the documents which they were given by the prior managing
agent, and that the prior managing agent had no reason to cheat anyone.
With their petition the owners have enclosed basically the same
documents submitted earlier, with the earliest stabilized lease still
being the complainant's.
The Commissioner is of the opinion that this petition should be denied.
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 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, to determine 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.S.2d 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.
ADM. REVIEW DOCKET NO.: BD 410554 RO
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.
Since in the present case the subject dwelling unit is located in the
Second Department, the DHCR is constrained to follow the JRD decision in
determining the tenant's overcharge complaint, limiting the requirement
for rent records to April 1, 1980. However, the owners have submitted
leases only from September 15, 1982, so they have still not shown that
the tenant's initial rent represented a lawful increase over the
(unknown) base date rent on April 1, 1980. Even if the undocumented
claim of a rent of $282.00 in a lease commencing January 1, 1982 were to
be accepted, there would still not be a complete rental history from the
base date. The Administrator was warranted in using established DHCR
procedures to establish the lawful rent where the owners had defaulted
on their obligation to prove the lawfulness of the rents charged.
Because of the possibility that the rents charged were not reduced after
the Administrator's order, the owners are cautioned to adjust the rent,
in leases after those considered by the Administrator, to amounts no
greater than that determined by the Administrator's order plus any
lawful increases, and to register any adjusted rents with the
Administrator's 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.
THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
ORDERED, that this petition be, and the same hereby is, denied and that
the Rent Administrator's order be, and the same hereby is, affirmed.
The lawful stabilization rent is $313.56 as of March 31, 1987.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
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