BG 110232 RO

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

          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    : 


          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 

          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 

          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 

          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.


                                          JOSEPH A. D'AGOSTA
                                          Acting Deputy Commissioner

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