BF 130268 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 130268 RO
Frank Cullen, DRO DOCKET NO.: Q-3119852-R
TENANT: Jeff Gelman
PETITIONER
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW IN PART
AND MODIFYING THE ORDER OF THE RENT ADMINISTRATOR
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
tenant.
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
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 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
demand.
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
$384.17.
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
immediately.
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
Opinion.
ISSUED:
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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