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 410280 RO
: DRO DOCKET NO. 23779
326-328 EAST 73RD STREET ASSOCIATES TENANT: THOMAS REED
PETITIONER :
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW IN
PART
On June 12, 1987, the above-named petitioner-owner filed a
Petition for Administrative Review against an order issued on May
13, 1987, by the Rent Administrator, 10 Columbus Circle, New York,
New York, concerning the housing accommodations known as 328 East
73rd Street, New York, New York, Apartment No. 1D, wherein the
Rent Administrator determined the fair market rent pursuant to the
special fair market rent guideline promulgated by the New York
City Rent Guideline Board for use in calculating fair market rent
appeals.
The Administrative Appeal is being determined pursuant to the
provisions of Sections 2522.3 and 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 in June 1984, by the
filing of a Tenant's Objection to Rent in which the tenant stated
that he was filing a fair market rent appeal. The owner was
served with a copy of the Tenant's Objection and afforded an
opportunity to submit rental data for comparable apartments. In
response the owner did not submit comparability data, but provided
a complete rental history for the subject apartment.
In Order Number 23779 as corrected on May 13, 1987, the Rent
Administrator determined the fair market rent of the subject
apartment to be $180.99 effective April 5, 1976, and found excess
rent paid of $1223.68 from April 1, 1980 through March 31, 1987.
In this petition, the owner contends in substance that the
amount of excess rent owed to the tenant should have been
apportioned between the owner and prior owner. The owner BF
410280 RO
submitted a copy of a deed showing it first acquired ownership of
the subject premises on January 25, 1984. The owner also contends
that there was no overcharge but submits no arguments or evidence
in support of this contention.
In answer to this petition, the tenant stated in substance
that apportionment of the overcharge is not warranted because when
the new owner purchased the subject premises, it took on
responsibility for all pre-existing claims and debts o the
property.
The Commissioner is of the opinion that this petition should
be granted in part.
Section 2526.1 of the Rent Stabilization Code provides in
pertinent part that for overcharge complaints filed or overcharges
collected on or after April 1, 1984, a current owner shall be
responsible for all overcharge penalties including penalties based
upon overcharges collected by any prior owner, but that such
provisions shall not apply to fair market rent appeals. I
proceedings involving fair market rent appeals, where there has
been a transfer of ownership of a building, the policy of the
Conciliation and Appeals Board, the agency formerly charged with
administering the Rent Stabilization Law, adopted by the Division
of HOusing and Community REnewal, provides that the obligation of
a new owner to refund excess rent is limited to such excess rent
collected by it and may not be extend to excess rent collected by
the prior owner in the absence of evidence of any collusion or
relationship between the new owner and prior owner. The
distinction between a fair market rent appeal and an overcharge
proceeding has been made because a fair market rent appeal
involves a tenant challenging the initial stabilized rent of an
apartment which has been decontrolled from the Rent Control Law.
If the
tenant does not challenge such initial stabilized rent within the
required period, it becomes the initial legal regulated rent upon
which all future rent increases must be based. If the tenant does
timely challenge the initial rent, a determination may be made
that the tenant's rent exceeds the fair market rent for the
apartment. Such determination would result in a rent adjustment
and refund of excess rent to the tenant but is not considered a
rent overcharge within the intent and meaning of Section 2526.1.
Based on the foregoing, the owner herein is responsible only
for the excess rent it actually collected - excess rent from
February 1, 1984 onwards - since there is no evidence of any
collusion or relationship between the owner and any prior owner.
The total excess rent including excess security from February 1,
1984 through March 31, 1987 amounts to $600.98.
The owner's contention on appeal that there was no overcharge
must be denied since the owner has raised no argument nor
submitted any evidence in support of such contention and has not
stated that the fair market rent was not correctly determined.
BF 410280 RO
The Commissioner notes that the prior owner was not afforded
an opportunity to submit an answer to the tenant's fair market
rent appeal. This order is issued without prejudice to the
tenant's right, if any, to proceed against the prior owner.
If the owner has already complied with the Administrator's
order and there are arrears due to the owner as a result of the
instant determination, the tenant is directed to pay off the
arrears in twelve equal monthly installments. Should the tenant
vacate after issuance of this order or already have vacated, said
arrears shall be payable immediately.
If the owner does not take appropriate action to comply
within 30 days from the date of this order, the tenant may credit
the excess rent against the next month(s) rent until fully offset.
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 to show
that the owner herein owes excess rent to the tenant only from the
time it began collecting rent for the subject apartment - February
1, 1984. The total amount of the excess rent from February 1,
1984 through March 31, 1987, is $600.98.
ISSUED
ELLIOT SANDER
Deputy Commissioner
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ADMINISTRATIVE REVIEW BUREAU
COVERING MEMORANDUM
ARB Docket No.: BF 410280 RO
DRO Docket No/Order No.: 23779
Tenant(s): Thomas Reed
Owner: 326-328 East 73rd Street Associates
Code Section: 2522.3 and 2526.1 of RSC
Premises: 328 East 73rd Street, New York, New York, Apt. 1D
Order and Opinion Granting Petition in Part
Petition granted in part to hold owner herein liable only for
excess rent it collected from tenant.
APPROVED:
Processing Attorney:
Supervising Attorney:
Bureau Chief:
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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