BF 130268 RO

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

      APPEAL OF                              DOCKET NO.: BF 130268 RO

           Frank Cullen,                     DRO DOCKET NO.: Q-3119852-R

                                             TENANT: Jeff Gelman              


      On October 9, 1987, the above-named petitioner-owner filed a Petition 
      for Administrative Review against an order issued on September 9, 1987  
      by the Rent Administrator, concerning the housing accommodations known 
      as 75-05 113th Street, Forest Hills, New York, Apartment No. 6D, wherein 
      the Rent Administrator determined that the owner had overcharged the 

      The Administrative Appeal is being determined pursuant to the provisions 
      of Section 2526.1 of the Rent Stabilization Code.

      The issue herein is whether the Rent Administrator's order was 

      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 on February 20, 
      1984 of a rent overcharge complaint by the tenant.  

      In answer to the tenant's complaint, rent records dating back to at 
      least April 1, 1980 were submitted to the Division.
      In Order Number  Q-3119852-R, the Rent Administrator determined that due 
      to the owner's failure to submit a complete rental history, the lawful 
      stabilization rent was based on Section 42A default procedure, effecting 
      a rent overcharge of $5,840.77, including excess security and interest 
      on that portion of the overcharge occurring on and after April 1, 1984.

      In this petition, the owner requests that the Administrator's order be 
      modified and contends in substance that, among other things, it complied 
      with the requests of the DHCR in that it submitted all leases or rent 
      records for the subject apartment.  The owner further alleges that the 
      order contains errors in the calculation of the lawful stabilization 
      rents as pertains to certain guidelines and that overcharges calculated 
      for the tenant's last lease in the Administrator's calculations were 
      incorrectly based on a 36 month lease term rather than 24 months which 
      is, purportedly, the actual term for said lease. 

          BF 130268 RO

      The Commissioner is of the opinion that this petition should be 
      grantedin 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) and to produce such records to the DHCR upon 

      Section 26-516 of the 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 to produce rent records for 
      more than four (4) years prior to the most recent registration, and 
      concomitantly, established a four 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 rights 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 four years prior to April 1, 1984 of 
      the 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).

      However, it has recently been held in the case of J.R.D. Mgmt. v. 
      Eimicke, 148 A.D.2d 610. 539 N.Y.S. 2d 667 (App. Div. 2d Dept., 1989). 
      motion for leave to reargue or for leave to appeal to the Court of 
      Appeals denied ( App. Div. 2d Dept., 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 four 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 Dept. 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, 

          BF 130268 RO

      and that such requirement is both rational and supported by the Law and 
      legislative history of the Omnibus Housing Act.

      Given that in the instant 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.  Since, in the instant 
      case, the record contains a rental history going back to April 1, 1980, 
      the owner cannot be held to have defaulted.

      Accordingly, in determining the lawful stabilization rents and 
      overcharges, the actual rent charged on April 1, 1980 shall herein be 
      the base rent over which subsequent guideline increases are calculated.
      For the period April 1, 1980 through December 31, 1985 used in the 
      Administrator's calculations, there is no evidence that the tenant paid 
      any excess in rents lawfully allowed under the applicable rent 
      guidelines including electrical inclusion increases since electricity is 
      included int he rent. 

      However, pursuant to the lease commencing January 1, 1986 and expiring 
      December 31, 1987, the Commissioner finds that the tenant was 
      overcharged in monthly rent.  Specificially, the owner was entitled to 
      the applicable guideline 17 increase of 6.5 percent over the base rent 
      of $312.07, establishing the lawful stabilization rent for said lease 
      term as $332.35.  Since the tenant paid a monthly rent of $349.25, the 
      owner charged the tenant an excess of $16.90 in monthly rent.

      The Commissioner finds that the owner was correct in its contention that 
      the lease term commencing January 1, 1986 (cited above) was for a period 
      of two years rather than three years.  Accordingly the amount in over 
      charges for this period is calculated as $16.90 x 21 months (for the 
      period beginning January 1, 1986 through September 30, 1987 used in the 
      Rent Administrator's order), or $354.90 plus $29.27 in interest, 
      totaling $384.17.

      The Rent Administrator's order is herein modified to reflect that the 
      owner cannot be held to have defaulted, that the term for the lease 
      commencing January 1, 1986 is two years, and that total overcharges for 
      the period April 1, 1980 through September 30, 1987 is established as 

      Because this determination concerns lawful rents only through September 
      30, 1987 used in the Administrator's order being appealed, the owner is 
      directed to adjust subsequent rents to an amount no greater than that 
      determined by the Rent Administrator's order plus any lawful increases.

      Upon the expiration of the period in which the landlord may institute a 
      proceeding pursuant to Article 78 of the Civil Practice Law and Rules, 
      the tenant may offset against any rent thereafter due the owner not in 
      excess of twenty percent per month of the remaining overcharge.

      If the owner has already complied with the Rent Administrator's order 
      and there are arrears due to the owner as a result of the instant 
      determination, the tenant is permitted to pay off the arrears in 12 
      equal monthly installments.  Should the tenant vacate after the issuance 
      of this order or have already vacated, said arrears shall be payable 

          BF 130268 RO

      THEREFORE, in accordance with the provisions of the Rent Stabilization 
      Law and Code, it is

      ORDERED, that this petition for administrative review be, and the same 
      hereby is, granted in part, and that the order of the Rent Administrator 
      be, and the same hereby is, modified in accordance with this Order and 


                                      JOSEPH A. D'AGOSTA
                                      Acting Deputy Commissioner


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