BG 110232 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. BG 110232 RO
: DISTRICT RENT OFFICE
DOCKET NO. Q 3120405 R
Tom Gjokaj, CDR 20,123
Woodhaven Blvd Associates,
TENANT: Richard Kling
PETITIONER :
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On July 20, 1987 the above-named petitioner-owner filed a Petition
for Administrative Review against an order issued on August 11,
1986, by the Rent Administrator, 10 Columbus Circle, concerning the
housing accommodations known as 91-47 88th Road, Queens, New York,
Apartment No. 4B wherein the Rent Administrator determined that the
owner had overcharged the tenant.
The current owner stated that he received a copy of the order
appealed herein on June 25, 1987 from the tenant but was never
served a copy of the order by DHCR. A review of the records
discloses that the current owner fully registered with DHCR from
1984 but that the prior owner was the only owner named on the order
and served by DHCR with a copy of the order.
Taking the aforementioned into account, the Commissioner deems the
July 20, 1987 filing of a Petition for Administrative Review by the
current owner as timely.
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 in March 1984
of a rent overcharge complaint by the tenant.
The prior owner (T. Lauko) failed to answer the tenant's complaint.
The current owner (T. Gjokaj) was never served with a copy of the
tenant's complaint.
BG 110232 RO
In Order Number 20,123, the Rent Administrator determined that due
to the owner's failure to submit a complete rental history, the
owner had collected a rent overcharge of $6003.00 including treble
damages on that portion of the overcharge occurring on and after
April 1, 1984.
In this petition, the current owner contends in substance that it
purchased the subject building on May 22, 1984 and was never
informed of the pending overcharge complaint filed in March 1984 by
either the Agency, prior owner or tenant until June 25, 1987 at
which time the order was hand delivered by the tenant; that
liability for the overcharge should be the sole responsibility of
the prior owner because the prior owner failed to supply a complete
rental history upon transfer of title; that the only records
available for the subject apartment are from August 1, 1982 and all
subsequent renewals after May 22, 1984 were calculated pursuant to
DHCR guidelines. In support of its contentions, the current owner
submitted the following:
(a) closing statement dated May 22, 1984 transferring title of
the subject premises from the prior owner,
(b) leases in effect from August 1, 1982 through July 31, 1987
The Commissioner is of the opinion that this petition should be
denied.
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 to date and produce them 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
BG 110232 RO
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, and that such requirement is both
rational and supported by the Law and legislative history of the
Omnibus Housing Act.
Since 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.
A review of the evidence discloses that both the prior owner and
current owner are unable to produce rental records for the subject
apartment prior to August 1, 1982.
Accordingly, the Rent Administrator's order establishing the lawful
stabilization rent utilizing the Section 42A default procedure and
finding a rent overcharge was warranted.
With regard to the current owner's contention that the prior owner
should be held liable for all overcharges, Section 2526.1(f) of the
Rent Stabilization Code provides in pertinent part that for
overcharge collected prior to April 1, 1984, an owner will be held
responsible only for his or her portion of the overcharge, in the
absence of collusion or any relationship between such owner and any
prior owners, and 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 collected by any prior owner.
In the instant case, an examination of the records discloses that
there is no evidence of collusion or any relationship between the
present owner and any prior owner.
Accordingly, the current owner, who purchased the subject premises
on May 21, 1984 is liable for overcharges collected between April 1,
BG 110232 RO
1984 and July 31, 1985 inclusive of treble damages and excess
security. It is noted that due process requirements are satisfied
since the current owner, although not served with a copy of the
tenant's complaint below, fully participated in the appeal
proceeding and conceded that it could not produce the required
rental history from the April 1, 1980 base date.
This order is issued without prejudice to any action the current
owner may have against the former owner as to the rent overcharges
collected by the former owner.
Because this determination concerns lawful rents only through
July 31, 1985, the owner is cautioned to adjust subsequent rents to
an amount no greater than that determined by the Rent
Administrator's order plus any lawful increases, and to register any
adjusted rents with this order and opinion being given as the
explanation for the adjustment.
THEREFORE, in accordance with the provisions of the Rent
Stabilization Law and Code and the Appellate Division ruling in JRD,
it is
ORDERED, that this petition for administrative review be, and the
same hereby is, denied, and, that the order of the Rent
Administrator be, and the same hereby is, affirmed.
ISSUED:
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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