BG 210314 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 210314 RO

                                          :  DISTRICT RENT OFFICE 
                                             DOCKET NO. K-3104273-R
           Bee Gee Excelsior Mgmt., Inc.,   
                                             TENANT: Arlene L. McCall         
                            PETITIONER    : 


      On July 25, 1987, the above-named owner filed a Petition for 
      Administrative Review against an order issued on July 2, 1987 by the 
      Rent Administrator, concerning the housing accommodations known as      
      5409 Kings Highway, Brooklyn, New York, Apartment No. A-1, wherein the 
      Rent Administrator determined that the owner was liable for overcharges 
      in rent.

      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 determination of 
      the base rent for the subject apartment, effecting overcharges to the 
      tenant, was correct.

      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 March 27, 1984 
      of a rent overcharge complaint by the tenant.

      A notice was served on the owner informing the owner of the tenant's 
      overcharge complaint and the requirement that said owner submit to the 
      DHCR a complete rental history.

      In response to the tenant's complaint,the owner stated that the subject 
      apartment became subject to the Rent Stabilization Law on May 31, 1968 
      and included in its response a computer listing indicating the rent 
      charged for the subject apartment as of November 14, 1984.

      Subsequently, the owner was served with a Final Notice Of Pending 
      Default wherein the owner was notified that it failed to submit a 
      complete rental history and that it was given a final opportunity to 
      submit to the Division the requisite rental history.

      The owner responded to the above Final Notice Of Pending Default stating 
      in essence that it is legally bound to produce to the DHCR rent records 
      dating back only to September 1, 1979.  The owner submitted with its 

          BG 210314 RO

      response rent charts showing the rents charged for the subject apartment 
      for the period June 1, 1980 through May 31, 1987.

      In Order Number K-3104273-R, the Rent Administrator determined that, due 
      to the owner's failure to submit to the DHCR a complete rental history, 
      the lawful stabilization rent was calculated using the Default 
      Procedure, effecting a rent overcharge of $6,415.45, including excess 
      security and interest on that portion of the overcharge occurring on and 
      after April 1, 1984.

      In this petition, the owner objects to the base rent established by the 
      Rent Administrator for the subject apartment.  The owner stated that 
      three changes in management occurred during the year 1986 and requests 
      a reconsideration in the instant proceeding of rent records which were 
      submitted with its petition.

      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 (or the date the apartment became subject to rent 
      stabilization, if later) and to produce such records 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 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, 

          BG 210314 RO

      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.

      However, the record discloses that the owner failed to produce to the 
      DHCR satisfactory proof of rent collected, such as rent ledgers or 
      leases, for the period April 1, 1980 through January 31, 1984.

      The Commissioner notes that, in consistency with the policy of the DHCR, 
      documentation which was submitted in the prior proceeding, consisting of 
      lists of rents and rent charts purporting to be rents collected, is 
      deemed unacceptable proof of the rents actually collected from the 

      Accordingly, the lawful stabilization rent established for the subject 
      apartment was calculated utilizing the Default Procedure inasmuch as the 
      Rent Administrator properly determined that the owner had defaulted in 
      its obligation to provide a full rental history.

      Further, although the owner did submit a rental history with its appeal, 
      the Commissioner notes that a rental history cannot be accepted for 
      consideration on appeal, since this is not a de novo proceeding and the 
      owner has not provided a satisfactory explanation for the non submission 
      of the requisite rental history in the proceeding before the Rent 

      The owner is directed to reflect the findings and determinations made in 
      the Rent Administrator's order on all future registration statements, 
      including those for the current year if not already filed, citing this 
      Order as the basis for the change.  Registration statements already on 
      file, however, should not be amended to reflect the findings and 
      determinations made in the Rent Administrator's order.  The owner is 
      further directed to adjust subsequent rents to an amount no greater than 
      that determined by this order plus any lawful increases.

      This order may, upon the expiration of the period in which the owner may 
      institute a proceeding pursuant to Article 78 of the Civil Practice Law 
      and Rules, be filed and enforced in the same manner as a judgment or not 
      in excess of twenty percent per month thereof may be offset against any 
      rent thereafter due the owner.

          BG 210314 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, 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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