BE 410180-RO;  BE 410091-RT
                                
                        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
APPEALS OF                              DOCKET NOS.:
                                        BE 410180-RO
       BELMONT REALTY COMPANY &         BE 410091-RT
       DOUGLAS K. SWISS,                DRO DOCKET NO.:
                                        TC 60555-G
                        PETITIONERS     TENANT: DOUGLAS K. SWISS
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  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
order.

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
warranted.

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
following:

     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
          the apartment.
          
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
Stabilization Code.

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
granted.

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
collected by
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,
1984.

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.


ISSUED:




ELLIOT SANDER
                                         Deputy Commissioner
    

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