DOC. NO.: BF 110157-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.: BF 110157-RO
MYDAC REALTY, : D.R.O. DOC. NOS.:
PETITIONER : Q-3118732-R
------------------------------------X CDR 29290
AS AMENDED
TENANT: PHILIP BROUILLET
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART
On June 19, 1987, the above-named petitioner-owner filed a Petition for
Administrative Review against an order issued on May 15, 1987 by the
District Rent Administrator, 10 Columbus Circle, New York, New York
concerning housing accommodations known as Apartment 2C at 94-25 57th
Avenue, Elmhurst, New York wherein the District Rent Administrator
determined that the tenant had been overcharged.
The issue in this appeal is whether the District Rent 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 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 he stated that he
had commenced occupancy on April 15, 1976 at a rent of $240.00 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 claimed a base date of April 1,
1984.
A Final Notice of Pending Default, stating the default procedures that
would be used if a rental history from June 30, 1974 or a later, proven
base date was not submitted was sent to the prior owner on June 16,
1986. It may not have been sent to the current owner.
In an order issued on March 6, 1987 the District Rent Administrator used
the default procedure to establish the lawful rents and to find an
overcharge of $3,483.58 from May 1, 1977 to April 30, 1984. That order
was later revoked, and an amended order was issued on May 15, 1987
finding an overcharge of $6,113.17 from April 12, 1976 to April 30,
1987.
In this petition, the owner contends in substance that overcharges
should be apportioned between it and a prior owner. In answer, the
tenant asserts in substance that the owner is responsible for all
overcharges.
In a later supplement to its petition, the owner contends in substance
that as a result of a recent appellate court decision it is required to
furnish leases only from 1982, being 4 years before it was served with
the tenant's complaint; and that it was ultra vires for the DHCR to
adopt a regulation providing that the previous Rent Stabilization Code
be applied to overcharge complaints filed before April 1, 1984.
The Commissioner is of the opinion that this petition should be granted
in part.
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, 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.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.
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. The rent of $264.55 being paid by
the tenant on April 1, 1980 is therefore the base date rent. The lawful
stabilization rents and the amount of overcharge are set forth on the
rent calculation chart attached hereto and made a part hereof. There is
an overcharge beginning May 1, 1984 because of the elimination of 3-year
leases by the Omnibus Housing Act of 1983 and the owner's provision of a
3-year lease to the tenant despite the Act. The Rent Guidelines Board
issued Guideline 15, applicable to leases commencing between October 1,
1983 and September 30, 1984, on June 29, 1983. On June 30, 1983 the
Omnibus Housing Act of 1983 was approved. Section 48 of the Omnibus
Housing Act provided that there would no longer be 3-year leases.
Section 64 of the Act made this provision applicable to leases and
renewals commencing on and after October 1, 1983. Even though the
tenant's renewal lease did not commence until May 1, 1984, and the owner
should have been aware of the relevant provisions of such an important
rent regulatory enactment as the Omnibus Housing Act of 1983, the owner
signed a 3-year lease with the tenant at the 10% rate of increase
originally provided for by the Rent Guidelines Board for 3-year leases
before the Omnibus Housing Act eliminated such leases. The owner should
have offered the tenant a one- or two-year lease at a 4% or 7% increase.
Because the owner could lawfully have charged no more than a 7% increase
for a (2-year) renewal lease commencing May 1, 1984, the Commissioner
has calculated the lawful rent for the period from May 1, 1984, to April
30, 1987 as a 7% increase over the previous rent. While it might have
been possible for the lease to be altered to a 2-year lease from May 1,
1984 to April 30, 1986 (at a 7% increase), and another 1- or 2-year
lease commencing May 1, 1986, this apparently was not done, since the
tenant's response dated April 17, 1986 (by which time he would have
known of a new lease if one commenced on May 1, 1986) lists a 3-year
lease at $369.42, and the owner's answer dated June 5, 1986 also lists a
rent of $369.42.
Because this order, similarly to the Administrator's order, concerns
lawful rents and overcharges only through April 30, 1987, the owner is
cautioned to adjust the rent in leases after those considered in this
order to amounts no greater than that determined by this order plus any
lawful increases, and to register any adjusted rents with this order
being given as the reason for the adjustment.
If the owner has already complied with the Administrator's order and
there are arrears due to the owner as a result of the present
determination, the owner is directed to allow the tenant to pay off the
arrears in twenty-four equal monthly installments. Should the tenant
vacate after the issuance of this order, or have previously vacated,
said arrears shall be payable immediately.
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 that the District Rent Administrator's order be, and the same hereby
is, modified in accordance with this Order and Opinion. The lawful
stabilization rents and the amount of overcharge are established on the
attached chart, which is fully made a part of this order. The total
overcharge, including excess security of $10.07, is $424.48 as of April
30, 1987.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
ADMINISTRATIVE REVIEW BUREAU
COVERING MEMORANDUM
ARB Docket No.: BF 110157-RO
DRO Docket No/Order No.: Q-3118732-R; CDR 29290 as amended
Tenant(s): Philip Brouillet
Owner: Mydac Realty
Code Section:
Premises: 94-25 57th Avenue, Elmhurst, New York
Apt. 2C
Order and Opinion Granting Petition In Part
JRD eliminates most of the overcharge, except for a portion
attributable to a 3-year lease in Guidelines Period 15 after the
Omnibus Housing Act of 1983 eliminated them.
APPROVED:
Processing Attorney:
Supervising Attorney:
Deputy Counsel:
Deputy Commissioner:
Mailed copies of Order and Determination to:
Tenant(s)
Owner
Tenant's Atty
Owner's Atty
Date: : by
signature
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