BG 210314 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 210314 RO
: DISTRICT RENT OFFICE
DOCKET NO. K-3104273-R
Bee Gee Excelsior Mgmt., Inc.,
TENANT: Arlene L. McCall
PETITIONER :
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
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
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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
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 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,
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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
tenant.
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
Administrator.
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.
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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.
ISSUED:
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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