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

          APPEAL OF                              DOCKET NO.:               
                                                 BD 510151 RT    
                                                 DRO DOCKET NO.:           
                                                 U 3123720 RT               
                     BERNARD MOORE,

                              PETITIONER      : 


               On April 29, 1987, the above-named petitioner-tenant filed a 
          Petition for Administrative Review against  an  order  issued  on
          April 8, 1987, by the District Rent  Administrator,  10  Columbus
          Circle, New York, NY, concerning housing accommodations known  as
          Apartment 52B at 536-44 Isham Street, New York, NY,  wherein  the
          District Rent Administrator determined that the tenant  had  been

               The Commissioner notes that this  proceeding  was  initiated
          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
          provisions  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 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 of  a
          fair market rent appeal and a rent overcharge  complaint  by  the
          tenant.  The tenant took occupancy pursuant to a lease commencing 
          June 1,1979 and expiring May  31,  1981  at  a  monthly  rent  of

               The prior owner (Robert E. Hill, Inc.)  was  served  with  a
          copy of the complaint and was requested to submit rent records to 

          ADM. REVIEW DOCKET NO.: BD 510151 RT
          prove the lawfulness of the rent being charged.  The prior  owner
          was also requested to submit a copy of a notice of initial  legal
          regulated rent (DC-2 notice) with proof of service on  the  first
          stabilized  tenant.   The  prior  owner  failed  to  submit   the
          requested  data.   The  prior  owner  advised  that  the  subject
          building was sold to Bruno Realty Corp. on August 18, 1986. 

               In Order Number  29,785,  the  District  Rent  Administrator
          determined the lawful stabilized rent using the default procedure 
          based on the prior owner's failure to submit  the  required  rent
          records, determined that the tenant had been overcharged  in  the
          amount of $2,761.69, including interest on overcharges  collected
          after April 1, 1984, and directed the refund of  said  amount  to
          the tenant.   

               In this petition, the tenant contends that the District Rent 
          Administrator failed  to  resolve  the  tenant's  application  to
          determine the  initial  legal  regulated  rent  and  ignored  the
          owner's failure to reply to DHCR's demand to submit a copy of the 
          DC-2 notice, that the overcharge was willful and  treble  damages
          should have been imposed and that  the  order  fails  to  include
          successor owners (Bruno Realty Corp. and Stellar Management)  who
          succeeded the prior owner named by the Administrator.  The tenant 
          submits  a  letter  to  the  tenants  from  Bruno  Realty   Corp.
          indicating purchase of the building on  August  18,  1986  and  a
          letter  to  the  tenants  dated  April  17,  1987  from   Stellar
          Management indicating that Stellar Management  was  the  managing
          agent for the building as of that date.     

               In answer to the petition, the Stellar Management  indicated
          that it had not received a copy of  the  tenant's  complaint  and
          requested a copy in order to  be able to respond thereto.

               By subsequent notices from the DHCR, the prior owner  (Bruno
          Realty Corp.), the prior managing agent (Stellar Management)  and
          the current owner in care of the prior managing agent and current 
          managing agent (Dimitrios Kaloidis c/o Cornerstone, Inc. and  c/o
          Lindjamar Realty  Mgt.  Co.)  were  served  with  copies  of  the
          tenant's original complaint and the Administrator's order in this 
          case.  The current owner and its managing agents were also served 

          with a copy of the tenant's petition for  administrative  review.
          The notices advised the parties that there was a gap in the rent
          records for the subject apartment  from  the  date  of  decontrol
          (July 1977) to June 1979  when  the  tenant  took  occupancy  and
          afforded the parties an  opportunity  to  submit  these  records.
               In answer, the current  managing  agent  (Lindjamar  Realty)
          advised that it became the agent for the building in August 1989, 
          that the prior owners had complied with the Administrator's order 
          and that all increases since have been based thereon.   

               The prior owner (Bruno  Realty  Corp.)  and  prior  managing
          agent (Sellar Management) did not submit an answer to the  DHCR's
          notice.  The notice to the prior managing agent for  the  current
          owner (Cornerstone, Inc.) was returned to the DHCR marked by  the
          post office "unable to forward." 

          ADM. REVIEW DOCKET NO.: BD 510151 RT
               The Commissioner is of the opinion that this petition should 
          be granted in part. 

               Section 42A of  the  Code  requires  that  an  owner  retain
          complete rent 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.  

               DHCR records consisting of a rent control registration  card
          indicate that a Landlord's  Report  of  Statutory  Decontrol  was
          filed for the subject  apartment  on  July  11,  1977.   Although
          afforded an opportunity to do so, none of the owners or  managing
          agents involved in this proceeding submitted rent records for the 
          period from  the  date  of  decontrol  to  the  tenant's  initial
          occupancy in June 1979.   

               The  Commissioner  finds  that  the  Administrator  properly
          applied the default procedure to establish the lawful  stabilized
          rent where  the  owners  or  managing  agents  failed  to  submit
          complete rent records from the base date.  It is noted  that  the
          default procedure is designed to  penalize  owners  who  fail  to
          submit the required rent records and that unlike the fair  market
          rent appeal procedure, the default procedure subjects  owners  to
          either interest or treble damages.  It is further noted  that  in
          this case, applying the special fair  market  rent  guideline  in
          effect as of the date of  decontrol  would  result  in  a  higher
          amount than the tenant's initial rent and would therefore  result
          in a determination that the tenant's initial rent was lawful.   

               [Pursuant to Special Fair Market Rent Guideline Number 9, in 
          effect as of the  date  of  decontrol  in  this  case,  the  1976
          Maximum Base Rent must be increased by 20% to determine the  fair
          market rent.  Increasing the 1972 Maximum Base Rent of $151.92 
          (based on DHCR records) by the appropriate biennial adjustments  
          results in a 1976 Maximum Base Rent of $201.09.  Increasing  this
          amount by 20% results in a fair market  rent  of  $241.31,  which
          exceeds the tenant's initial rent.] 

               Section 26-516 of the Rent Stabilization Law  provides  that
          where the DHCR finds that a tenant has been overcharged  in  rent
          it shall assess a penalty equal to three times the amount of  the
          overcharges found against the owner  (effective  April  1,  1984)
          unless the owner establishes by a preponderance of  the  evidence
          that the overcharge was not willful, in which case interest shall 
          be imposed.

               As indicated above, while the  application  of  the  default
          procedure in this case results in a finding  of  overcharge,  the
          application of the fair market rent appeal procedure would result 
          in a finding of no excess rent.  The Commissioner finds, based on 
          equitable considerations, that the overcharge was not willful and 
          that the imposition of treble damages is not  warranted  in  this
          case.  The imposition of interest rather than treble  damages  is

          ADM. REVIEW DOCKET NO.: BD 510151 RT
               Section 2526.1(f) of the  current  Rent  Stabilization  Code
          provides in pertinent part that:

                    1) for overcharges collected prior to April 1, 1984,
                       an owner will be held responsible only for his or
                       her portion of the overcharges, in the absence of
                       collusion or any relationship between such owner
                       and any prior owner; and

                    2) for overcharges collected on or after April 1, 
                       1984, a current owner shall be responsible for
                       all overcharge penalties, including penalties
                       based upon overcharges collected by any prior

               The record  in  this  case  and  DHCR  registration  records
          indicate that the subject building was conveyed to  Bruno  Realty
          on August 18, 1986; that Stellar Management became  the  managing
          agent for Bruno Realty as of April 1987; that the  current  owner
          is Dimitrios Kaloidis; that the  prior  managing  agent  for  the
          current  owner  was  Cornerstone,  Inc.;  and  that  the  current
          managing agent for the current owner is Lindjamar Realty.

               The prior owner  Bruno  Realty,  the  prior  managing  agent
          Stellar Management, the current owner Dimitrios Kaloidis and  its
          managing  agents  Cornerstone,  Inc.  and  Lindjamar  Realty  are
          jointly and severally responsible with the prior owner Robert  E.
          Hill, Inc. for the overcharges ($970.88) occurring from April  1,
          1984 to August 31, 1986, the  lst  day  of  the  month  following
          transfer of the subject building to Bruno  Realty.   This  amount
          includes interest.  This finding  is  without  prejudice  to  any
          action that a party may have for overcharges reimbursed  by  that
          party which another party had collected.  

               This order may upon the expiration of the  period  in  which
          the owner may institute a proceeding pursuant to  Article  78  of
          the Civil Practice Law and Rules, be  filed  and  enforced  as  a
          judgment or, as to the overcharge liability of the current owner, 
          not in excess of twenty percent per month thereof 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 the District Rent Administrator's  Order  be
          and the same hereby is modified to show  that:  the  prior  owner
          Robert E.  Hill,  Inc.  is  responsible  for  refunding  a  total
          overcharge of $1319.28 the amount  of  the  overcharge  occurring
          from June 1, 1979 through March 31, 1984; the prior owner, Robert 
          E. Hill, Inc., and  the  prior  owner  Bruno  Realty,  the  prior
          managing agent Stellar Management, the  current  owner  Dimitrios
          Kaloidis and its managing agents Cornerstone, Inc. and  Lindjamar
          Realty, are jointly and severally liable  for  refunding  $970.88
          the amount of overcharge occurring from April 1, 1984  to  August
          31, 1986; and the prior owner Bruno Realty,  the  prior  managing
          agent Stellar Management, the current  owner  Dimitrios  Kaloidis
          and its managing agents Cornerstone, Inc.  and  Lindjamar  Realty

          ADM. REVIEW DOCKET NO.: BD 510151 RT
          are jointly and  severally  liable  for  refunding  $271.53,  the
          amount of overcharge occurring from September 1,  1986  to  March
          31, 1987.


                                          JOSEPH A. D'AGOSTA
                                          Deputy Commissioner



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