BE 410180-RO; BE 410091-RT
STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEALS OF DOCKET NOS.:
BELMONT REALTY COMPANY & BE 410091-RT
DOUGLAS K. SWISS, DRO DOCKET NO.:
PETITIONERS TENANT: DOUGLAS K. SWISS
ORDER AND OPINION DENYING OWNER'S PETITION FOR ADMINISTRATIVE
REVIEW AND GRANTING TENANT'S PETITION FOR ADMINISTRATIVE REVIEW
On May 14, 1987, the above-named petitioner-owner filed a Peti-
tion for Administrative Review against an order issued on April
22, 1987, by a District Rent Administrator at 10 Columbus Circle,
New York, New York concerning the housing accommodation known as
230 East 79th Street, Apartment 17-A, New York, New York wherein
the District Rent Administrator determined that the tenant had
been overcharged. On May 27, 1987, the above named tenant also
filed a Petition for Administrative Review against the same
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 Stabili-
zation Code (Code) contained herein are to the Code in effect on
April 30, 1987.
The issue in this appeal is whether the Administrator's order was
The Commissioner has reviewed all of the evidence in the record
and has carefully considered that portion of the record con-
cerning the issues raised in the Administrative appeal.
This proceeding was originally commenced on May 8, 1982, by the
filing of a rent overcharge complaint based upon the owner's
failure to provide a rental history for the subject apartment and
the collection of a broker's fee which the tenant claimed she
paid to the owner's wife. The tenant took occupancy of the sub-
ject apartment on October 1, 1980, pursuant to a one year lease
at a monthly rental of $842.46.
The owner was served with a copy of the tenant's complaint on
July 23, 1982 and was sent a notice of pending default on July
29, 1986, advising that treble damages would be imposed if the
owner does not establish that the overcharge was not willful.
In answer, the owner, asserts that no overcharge was collected
and that the broker's fee which was collected was not illegal. In
support of his contention that no overcharge was collected the
owner provided the agency with leases from the period of January
1, 1972 through September 30, 1987. Additionally, the owner
submitted copies of cancelled checks and receipts establishing
that improvements were made to the subject apartment.
The bills submitted, dated October 1979, were for the installa-
tion of a new refrigerator, dishwasher and the painting and
plastering of the subject premises which occurred in November
1979. Moreover, the owner claims that on October 1, 1980, the
owner installed a new dishwasher, refrigerator and repainted the
apartment. In support of his claim the owner submitted receipts
totalling the sum of $3,267.78 for all improvements alleged.
Secondly, in order to substantiate that the broker's fee col-
lected was not unlawful the owner provided the Division with the
1. a copy of the advertisement for the subject apartment
in the N.Y. Times placed there by Lisa Rich, broker
through Lewis Advertising Agency for August 3-6, 10,
13, 17, 20, 24, 27 and 31, 1980.
2. a letter dated April 14, 1982 from Lisa Rich, on her
business letterhead, denying an affiliation with
Belmont East Co. and submitting the agency agreement
request by Douglas K. Swiss.
3. The Agency agreement employing Lisa Rich to find an
apartment in return for the commission of $1,213.40
signed by Douglas K. Swiss, dated August 24, 1980.
4. The apartment application signed by Douglas Swiss
indicating that the tenant had written "papers" in
response to the inquiry, as to where he learned of
On October 17, 1986, the District Rent Administrator issued CDR
24,184 which terminated the proceeding because the complaining
tenant vacated the subject premises and left no forwarding ad-
dress. However, the proceeding was terminated without prejudice
to the tenant's reopening upon written request to the District
Rent Administrator. Subsequently, on November 24, 1986, CDR 24,
184 was revoked and the proceeding was reopened upon the request
of the tenant.
The Administrator in determining the lawful stabilized rent
granted the owner an increase of $14.39, 1/40th of the cost of
the equipment installed within the apartment pursuant to Section
20(c)(1) of the Rent Stabilization Code. The Administrator did
not grant an increase for the painting and plastering of the
subject premises. The Division has ruled that an owner is not
entitled to an increase pursuant to Section 20(c)(1) of the Code,
for work which constitutes normal decorating, maintenance and
painting prior to a new tenant's occupancy.
Moreover, the owner was not granted an increase for the
installa-tion of the new dishwasher, refrigerator and repainting
during the month of September 1980.
The Administrator based this decision upon the fact that a new
refrigerator and dishwasher had been installed within the subject
apartment within the last year and an increase was granted for
the prior installation. In addition, the 1980 bills do not
specify which apartment the new equipment was intended for.
Therefore, the increase was disallowed.
The Administrator found the collection of the broker's fee to
have been lawful. The Administrator based its determination upon
rulings by the Conciliation and Appeals Board (CAB), the agency
formerly charged with enforcement of the Rent Stabilization Law,
that the acceptance of a broker's fee by an independent broker
without the performance of concrete and definitive brokerage
service for a tenant is a violation of Section 62A of the Rent
Therefore, in CDR 24, 184, as amended, issued on April 22, 1987,
the Rent Administrator established the lawful stabilized rent
based upon the owner's submission of a complete rental history
for the subject apartment and directed a refund of $19,898.09
including interest and an additional $1,213.40 equalling the
unlawful collection of the fee.
In this petition, the owner contends that it should not be held
liable for the collection of the illegal broker's fee. In
support of this claim he asserts that documentation was submitted
to the Administrator establishing that the broker was an inde-
pendent agent and not affiliated with the Belmont East Company.
The owner also asserts that the revocation of CDR 24,184, was
improper since the revocation was not based on fraud, illegality
or an irregularity in a vital matter. The owner contends that
CDR 24,184 was reopened based upon the assertions raised by a
party other than the complainant. Lastly, the owner asserts that
there is no overcharge because improvements were made within the
apartment, for which the owner is entitled to 1/40th of the cost
of the improvements pursuant to Section 20(c)(1) of the Rent
Sta-bilization Code and contends that the complaining tenant
vacated the apartment as of March 2, 1984 and therefore the issue
of an overcharge is moot.
In response to the owner's petition the tenant asserts that the
Petition for Administrative Review should be denied because the
owner has not alleged new facts or submitted additional informa-
tion. The tenant contends that all issues raised by the owner in
the petition have been decided by the Administrator based upon
evidence submitted by both parties.
In his petition the tenant contends that treble damages must be
assessed since the overcharge was not the result of a mere
calcu-lation error but was willful. In support of this assertion
the tenant makes reference to the magnitude of the monthly
overcharge, and the collection of the illegal brokerage fee.
The owner was served with a copy of the tenant's petition.
How-ever, he has failed to interpose an answer.
The Commissioner is of the opinion that the owner's petition
should be denied and that the tenant's petition should be
A review of the records indicates that the Administrator
care-fully considered the issues raised in this petition.
Evidence within the file indicates that the brokerage fee
Ms. Rich was an illegal fee for which the owner is liable. The
Commissioner notes that the owner utilized the superintendent of
the subject premises to inform prospective tenants that there was
a vacant apartment within the building. A crucial factor which
the Administrator relied on was the superintendent's collection
of one month's rent, a security deposit, and the brokerage fee
from the complaining tenant before the tenant had signed a
brokerage agreement. Additionally, the Administrator considered
the fact that the broker and owner had the same phone number.
Accordingly, the owner has failed to establish that he used an
independent broker and that they were separate entities.
It is the established position of the Division as well as the
predecessor Conciliation and Appeals Board, and the courts have
affirmed that the collection of a brokerage fee by an owner or
one associated with the owner constitutes an evasive practice in
violation of Section 62A of the former Rent Stabilization Code.
Based upon the above cited evidence the Commissioner finds that
this portion of the Rent Administrator's order is correct and
should be affirmed.
The Commissioner also finds that the revocation of CDR 25,184 was
proper. The revocation was based upon an irregularity in a vital
matters. The complaint had been dismissed because the tenant
failed to respond to correspondence sent by the Division. How-
ever, a review of the records indicates that the tenant-
peti-tioner was the party who requested the reopening of the case
and was the leaseholder and a member of the complaining tenant's
immediate family and remained in occupancy of the subject apart-
ment. Therefore, the revocation of CDR 25,184 was proper.
Lastly, the Commissioner finds that the partial disallowance of
1/40th of the improvement cost was proper. Evidence within the
file indicates that the owner was afforded ample opportunity to
provide the Division with bills and receipts establishing that he
expended funds for Apartment 17-A specifically but failed to do
so. Thus, this portion of the Administrator's order is affirmed.
The Rent Stabilization Code provides that treble damages shall be
assessed on overcharges where the owner has failed to prove by a
preponderance of the evidence that the overcharge was not a
willful act. Evidence within the file indicates that the owner
has failed to meet its burden of establishing that the overcharge
was not willful. Therefore, treble damages are hereby granted on
that portion of the overcharge occurring on or after April 1,
Factors that establish the willfulness of the overcharge include
the excessive rent collected whenever a new tenant took occupancy
(February 1, 1975, October 1, 1979 and October 1, 1980) and the
owner's failure to substantiate the new equipment purchased
specifically for the subject apartment. Also relevant is the
fact that the owner collected for the cost of the painting prior
to the tenant's occupancy. The Conciliation and Appeals Board
(CAB) and DHCR have consistently ruled that the cost of painting
does not qualify for a rent increase pursuant to Section 20(c)(1)
because it constitutes ordinary decorating and repair.
This order of the State Division of Housing and Community Renewal
awarding penalties 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 by the
tenant in the same manner as a judgment.
THEREFORE, in accordance with the rent provisions of the Rent
Stabilization Law and Code, it is
ORDERED, that the owner's petition be, and the same hereby is,
denied, and the tenant's petition be, and the same hereby is,
granted, and that the order of the District Rent Administrator
be, and the same hereby is, modified as appears on the annexed
rent calculation chart, which is hereby made fully part of this
order and opinion and reflects the assessment of treble damages
on overcharges on or after March 31, 1984.