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
APPEALS OF DOCKET NO. BG 410275 RO
: BJ 410001 RT
ELI MAYER, LUI JR. REALTY CORP., BI 410169 RO
AND QUEN-DUN CORPORATION BY CI 410262 RO
YAU INTERNATIONAL, INC. CJ 410191 RO
DRO DOCKET NO. T/A 9980
PETITIONERS : 44062
------------------------------------X TC-079480-G
TC-080685-G
ORDER AND OPINION GRANTING TENANT'S PETITION FOR ADMINISTRATIVE
REVIEW AND DENYING CURRENT OWNER AND PRIOR OWNER'S PETITIONS FOR
ADMINISTRATIVE REVIEW
On July 2, 1987, October 5, 1987, September 2, 1987,
September 2, 1988 and October 12, 1988, the above-named
petitioners filed Petitions for Administrative Review against
orders issued on May 28, 1987, July 29, 1987, and July 28, 1988,
by various Rent Administrators concerning the housing
accommodations known as 178-180 Fifth Avenue, New York, New York,
Apartment No. 4(2nd floor). The Commissioner deems it appropriate
to consolidate these petitions for determination herein since they
involve common issues of law and fact.
The Administrative Appeals are being determined pursuant to
the provisions of Sections 2526.1 and 2521.1 of the Rent
Stabilization Code and relevant provisions of the former Rent
Stabilization Code.
The Commissioner has reviewed all of the evidence in the
record and has carefully considered that portion of the record
relevant to the issues raised by the administrative appeals.
The Commissioner notes that two of these proceedings were
originally filed prior to April 1, 1984. Sections 2526.1(a) (4)
and 2521.1(d) of the Rent Stabilization Code (effective May 1,
1987) governing rent overcharge and fair market rent proceedings
provide that determination of these matters be based upon the law
or code provisions in effect on March 31, 1984. Therefore, unless
otherwise indicated, reference to Sections of the Rent
Stabilization Code (Code) contained herein are to the Code in
effect on April 30, 1987.
Docket T/A 9980, CDR 30,281 was originally commenced on
November 2, 1981 by the filing of a fair market rent adjustment
application (hereafter fair market rent appeal) by the tenant in
BG 410275 RO et al
which the tenant stated in substance that he first moved to the
subject apartment pursuant to a lease commencing August 1, 1981.
Lui Jr. Realty Corp.(hereafter current owner) and Quen-Dun Corp.
by Yau International, Inc.(hereafter prior owner) were served with
a copy of the tenant's fair market rent appeal and afforded an
opportunity to submit June 30, 1974 or post June 30, 1974
comparability data for determining the fair market rent of the
subject apartment and directed to submit a complete rental history
for the subject apartment including a copy of and DC-1 or DC-2
Notice served on the tenant or any prior tenant. The required
comparability data and rental history were not submitted. On
April 2, 1987, the current owner stated in substance that the
floor which contained the subject apartment was a loft cut in two
to make two apartments prior to 1980 and that the tenant herein
signed a commercial lease upon renting the subject apartment in
1981.
In Order Number CDR 30,281 issued on May 28, 1987, the Rent
Administrator adjusted the initial legal regulated rent by
establishing a fair market rent of $255.53 effective August 1,
1981, the commencement date of the complaining tenant's initial
lease. Based on the failure to submit June 30, 1974 or post June
30, 1974 comparability data, the Rent Administrator determined the
fair market rent using the special fair market rent guidelines
alone. The Rent Administrator further determined that the tenant
had paid excess rent of $20,428.72 from August 1, 1981 to May 31,
1987, and directed the current and prior owners to refund that
portion of the excess rent that each had collected.
In petition BG 410275 RO filed against docket T/A 9980, CDR
30,281 on July 2, 1987, the current owner contends, in substance
that it purchased the building subject to the existing commercial
loft lease, and without any knowledge of any objections of the
tenant; that sometime in 1975 or 1976 a fire substantially damaged
the premises, and substantial repairs and alterations were made
and the "subject premises" was divided from a larger loft; that it
is continuing in its efforts to correct the Certificate of
Occupancy and locate relevant building department records and
rental history documents; that, on information and belief, the
prior owner filed applications to legalize the alterations, and
had rented part of the subject premises as commercial space; that,
since the tenant took possession of the premises as a commercial
loft, in 1981, when the premises was not governed by rent control
or rent stabilization regulations. that this proceeding is
improper and the order should be vacated; that, soon after the
purchase of the building in 1984, the apartment was registered as
a rent stabilized unit; that, since the tenant did not timely
object to the apartment registration forms, the tenant should not
be permitted to object to said registration; and, if the rent
ordered by the Administrator is upheld, the 1981 base rent should
be increased by a 15% vacancy allowance, with subsequent increases
for the renewal leases in 1983 and 1985.
BG 410275 RO et al
In answer to petition BG 410275 RO, the tenant stated in
substance that the failure of the prior owner to advise the
current owner of the complaint cannot be blamed on the tenant;
that there were four apartments on the second floor (floor where
subject apartment is located) in 1939, in 1981, and at present;
that the owner's assertions regarding alterations are speculative
and undocumented; that the owner has had more than three years to
locate records; that the subject apartment was never rented as
commercial space, that the tenant has never used the subject
apartment commercially and that the prior tenant had a rent
stabilized lease and paid about $250.00 per month before vacating
in 1980.
In answer to petition BG 410275 RO, the prior owner stated in
substance that it never received notice of the tenant's fair
market rent appeal or of the Rent Administrator's order although
it did receive a letter from the current owner including a copy
of the current owner's petition (said petition contained a copy of
the Rent Administrator's order issued under docket T/A 9980), that
upon information and belief the subject apartment is a r3gistered
loft or was previously commercial space so that the tenant herein
is precluded from filing a fair market rent appeal.
Docket 44062 was commenced on September 26, 1984 by the
tenant's filing of an objection to the apartment registration. In
an order issued on JUly 29, 1987 under said docket, the Rent
Administrator accepted the owner's contention that prior to the
tenant's occupancy, the space allotted to the subject apartment
was used commercially, found that the tenant's first rent of
$500.00 could not be challenged and stated that if free
electricity was part of the negotiated rent, it is a service tho
which the tenant was entitled. In said order, the tenant's
address was incorrectly listed as 1787 Fifth Avenue rather than
178-180 Fifth Avenue.
In petition BJ 410001 RT filed against docket 44062 on
October 5, 1987, the tenant alleges in substance that he never
received a copy of the Rent Administrator's order under docket
44062 from the DHCR but only received a copy as part of the
current owner's petition (BJ 410169 RO) on September 9, 1987; that
the prior fair market rent order T/A 9980 correctly determined the
rent, that the tenant acknowledges that electricity is not
included in the rent but that the owner has not installed a
separate electric meter in the subject apartment; and that the
subject apartment has been occupied residentially for over forty
years.
In answer to petition BJ 410001 RT, the current owner
contended in substance that the tenant's petition was untimely;
that statements of other tenants in the subject premises support
the owner's claim that the subject apartment was not a prior
existing apartment and that prior tenant Joanne NOble rented all
of "2nd floor south space" and that all or part of the"2nd floor
south space" had been rented as commercial space prior to the
BG 410275 RO et al
occupancy of the tenant herein although the owner is unable to
locate some of the prior owners and their rent records.
In petition BJ 410169 RO filed against docket 44062 on
September 2, 1987, the current owner alleges in substance that it
is only appealing against that portion of the order in which the
Rent Administrator stated that if free electricity was part of the
negotiated rent, it is a service to which the tenant is entitled.
The current owner urges that it was not negotiated or agreed that
the owner would supply free electricity to the tenant, that
although the subject apartment and another apartment (apartment 3)
share a common electric meter, apartment 3 has been unoccupied for
most of the occupancy of the tenant herein and that the owner
intends to install a separate electric meter in the subject
apartment.
Docket TC-079480-G, CDR 33,776 was originally commenced on
December 12, 1983 by the tenant's filing of a rent overcharge
complaint in which the tenant stated in substance that prior
tenant Janet Noble paid a rent of about $250.00 per month until
vacating in 1980 and that he paid an illegal broker's fee of
$500.00 to the prior owner. The tenant submitted a receipt for
the broker's fee in support of this contention.
The prior owner and the current owner were served with a copy
of the tenant's overcharge complaint and directed to submit a
complete rental history for the subject apartment.
In a response dated March 5, 1984, the prior owner stated in
substance that it purchased the subject premises in June 1981,
that the subject apartment was vacant at the time of purchase and
that the tenant herein leased the subject apartment as semi
professional space.
The current owner stated in substance that it purchased the
subject premises in April 1984, that the tenant' lease was renewed
for two years in April 1984, and that in June 1984, the subject
apartment was registered with the DHCR as a rent stabilized unit.
In Order Number CDR 33,776 issued on July 29, 1988, the Rent
Administrator determined, on the basis that the current and prior
owners had failed to submit a complete rental history, that the
tenant had been overcharged in the amount of $13,162.54 from
August 1, 1981 through July 31, 1988 including interest on that
portion of the overcharge occurring on and after April 1, 1984 and
set the tenant's initial rent at $393.70 effective August 1, 1981.
The owner was also directed to refund the broker's fee of $500.00.
Docket TC-080685-G was terminated on September 12, 1988, as a
duplicate of the aforementioned docket TC-079480-G, CDR 33,776.
In petition CI 410262 RO filed against docket TC-079480-G,
CDR 33,776, on September 2, 1988, the current owner alleges in
substance that it is not responsible for the return of the
BG 410275 RO et al
broker's fee; that as of July 1, 1987, the tenant has been paying
only $273.42 per month in accordance with T/A 9980 so that the
overcharge found herein should be reduced accordingly and that in
any event the owner is in agreement with the determination in
docket 44062 finding no rent overcharge occurred.
In petition CJ 410191 RO (refiling of rejected petition CI
410002 RO) timely refiled against docket TC-079480-G, CDR 33,776,
on October 12, 1988, the prior owner alleges in substance that it
was not notified of the tenant's complaint or any deadline to
submit a complete answer, that it purchased the subject premises
without a complete rental history and the fact that the subject
apartment was previously utilized as commercial space entitled the
prior owner to charge a first rent to the tenant.
The Commissioner is of the opinion that the tenant's petition
should be granted and that the current owner's and prior owner's
petitions should be denied.
At the outset, the tenant's petition must be considered as
timely filed since the order appealed from was sent to the tenant
at an incorrect address and the tenant has stated that he never
received a copy of the order from the DHCR.
With regard to the prior owner's contention that it never
received a copy of the tenant's fair market rent appeal or the
order issued under docket T/A 9980, the Commissioner notes that
the prior owner admitted receiving a copy of the current owner's
petition including a copy of said fair market rent order and all
of the prior owner's arguments against said order contained in its
answer to the current owner's petition are considered on the
merits herein. In addition the prior owner received a copy of the
tenant's overcharge complaint and participated in the overcharge
proceeding contrary to its allegations under petition CJ 410191
RO.
Turning to the merits, an examination of the records
discloses that pursuant to a Certificate of Occupancy for the
subject premises issued on February 21, 1939, the subject premises
consisted of several stores and 15 apartments including four
apartments on the second floor (floor where the subject apartment
herein is located). Further maximum base rent records for the
subject premises indicate that in 1972 the subject premises was
listed as containing 18 rent controlled apartments including three
apartments on the second floor - one of which was listed as
apartment 4 - the subject apartment. These records appear to
contradict the current owner's and prior owner's assertions that
the subject apartment was subdivided from larger space at a later
date. In addition 1980 maximum base rent records also list the
subject premises as containing 18 apartments of which seven (not
including the subject apartment) remained subject to rent control.
There is no evidence in the record to support the current owner's
and prior owner's contentions that the subject apartment was ever
subdivided after extensive fire damage in 1975 or 1976 and used
BG 410275 RO et al
commercially. Statements submitted by two other building tenants
do not support such contention but merely state that Jo Anne Noble
occupied the 2nd floor south apartment until 1980 and that the
tenant herein than occupied the rear half of the second floor
south apartment in 1981. Although the tenant herein did sign a
loft lease for the subject apartment in 1981, the current owner
and prior owner have submitted no evidence that the tenant herein
ever intended to, or did in fact, use the subject apartment in a
semi-professional or commercial manner and have not established
that the subject premises was ever registered with the Loft Board.
In addition neither the prior owner not the current owner have
submitted a complete rental history for the subject apartment
although directed to do so on numerous occasions. The record in
this case taken as a whole supports the tenant's contention that
the subject apartment has always been used for residential
purposes. Since any agreement by the tenant to waive his rights
under the Rent Stabilization Law and Code is void, the tenant's
signing of a loft lease does not negate the fact that the tenant
is entitled to the status of a rent stabilized tenant.
Accordingly, the Rent Administrator's order issued under
docket 44062 finding no rent overcharge on the basis that the
subject apartment had been used commercially before being rented
to the tenant herein is revoked since no evidence has been
submitted to substantiate such commercial usage although both the
prior and current owners were afforded ample opportunity to do so
during the course of these multiple proceedings. Further the Rent
Administrator's orders issued under dockets TC-079480-G, CDR
33,776 and docket TC-080685-G finding a rent overcharge based on
the failure to submit a complete rental history are revoked on the
basis that they conflict with the earlier order issued under
docket T/A 9980, CDR 30,281 which determined the fair market rent
of the subject apartment.
Docket T/A 9980, CDR 30,281 is affirmed with the following
modifications. Since the tenant submitted proof that he paid an
illegal broker's fee of $500.00 to the prior owner and the prior
owner has not refuted such proof although given an opportunity to
do so, the prior owner is directed to refund the $500.00 broker's
fee to the tenant. Since the tenant and the current owner agree
that electricity is not included in the rent of the subject
apartment, the parties are advised that electricity is not
included in the rent and that the tenant must pay for electricity
in the subject apartment once the owner installs a separate
electric meter in the subject apartment. The current owner
remains responsible for electricity costs prior to such
installation. Since all parties agree that the current owner
purchased the subject premises in mid April 1984, the excess rent
owed the tenant from each owner is as follows: The prior owner is
directed to refund $9017.51 representing excess rent for the
period from August 1, 1981 through April 30, 1984 plus the $500.00
broker's fee (included in the $9017.51 total). This order is
issued without prejudice to the tenant's rights, if any, to
BG 410275 RO et al
proceed against the former owner in a court of competent
jurisdiction. The current owner is directed to refund to the
tenant $11,911.21, representing excess rent for the period from
May 1, 1984 through May 31, 1987 plus excess security (included in
the $11,911.21 total).
With regard to the current owner's contention that it is
entitled to a 15% vacancy allowance upon the initial renting to
the subject tenant in 1981 and to subsequent renewal increases, it
is noted that no additional vacancy allowance is permitted to be
added to a fair market rent and that the owner was in fact
credited with a renewal increase effective August 1, 1984.
Because this determination concerns lawful rents only through
May 31, 1987, the current owner is cautioned to adjust subsequent
rents to am amount no greater than that determined by this order
plus any lawful increases and to register any adjusted rents with
this order and opinion being given as the explanation for the
adjustments.
The current owner is directed to roll back the rent to the
stabilized rent consistent with this decision and to refund or
fully credit against future rents over a period not exceeding six
months from the date of receipt of this order, the excess rent
collected by the current owner.
In the event the current owner does not take appropriate
action to comply within 35 days from the date of this order, the
tenant may credit the excess rent collected by the current owner
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 the tenant's petition be and the same hereby is
granted, that the current owners and the prior owner's petitions
be, and the same hereby are, denied, that the Rent Administrator's
order issued under docket T/A 9980, CDR 30,281 be, and the same
hereby is, affirmed as modified in accordance with this order and
opinion, and that the Rent ADministrator's orders issued under
docket numbers 44062, TC-07948_G, CDR 33,776 and TC-080685-G be,
and the same hereby are, revoked.
ISSUED
ELLIOT SANDER
Deputy Commissioner
````````````
ADMINISTRATIVE REVIEW BUREAU
COVERING MEMORANDUM
ARB Docket No.: BG 410275 RO, BJ 410001 RT, BI 410169 RO,
CI 410262 RO, CJ 410191 RO
DRO Docket No/Order No.: T/A 9980, 44062, TC-079480-G
TC-080685-G
Tenant(s): Eli Mayer
Owner: Lui Jr. Realty Corp. and Quen-Dun Corporation by Yau
International, Inc.
Code Section: 2526.1 and 2521.1 of RSC
Premises: 178-180 Fifth Avenue, New York, New York, Apt 4
(2nd floor)
Order and Opinion Granting Tenant's Petition and Denying Prior
Owner's and Current Owner's Petitions
Tenant's petition granted and prior owner's and current
owner's petitions denied on the basis fair market rent of subject
apartment was correctly determined and rent overcharge complaints
in conflict with fair market rent determination must be revoked
APPROVED:
Processing Attorney:
Supervising Attorney:
Director:
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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