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

          ------------------------------------X 
          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    : 
          ------------------------------------X 

          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




                                                    
          ```````````````















                            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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