Docket Number: BG-410291-RO
STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: BG 410291-RO
SWEET LOU ASSOCIATES, DRO DOCKET NO.: CDR 30,817
PETITIONER : TENANT: EILEEN O'CONNOR
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On July 28, 1987, the above-named petitioner-owner filed a petition
for administrative review against an order issued on July 7, 1987,
by the Rent Administrator, 10 Columbus Circle, New York, New York,
concerning the housing accommodations known as Apartment 1-F, 153
Norfolk Street, New York, New York, wherein the Rent Administrator
determined that there had been an overcharge and ordered a refund of
$5,069.49, including interest and excess security.
The Commissioner notes that this proceeding was initiated 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.
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 appeal.
The tenant commenced this proceeding on March 22, 1983 by filing an
overcharge complaint with the New York City Conciliation and Appeals
Board (CAB), the agency formerly charged with enforcing the Rent
Stabilization Law, based in part on an alleged failure by the owner
to provide a complete rental history.
In an answer to the complaint dated October 30, 1986, the current
owner-petitioner submitted an incomplete rental history stating it
was unable to obtain leases prior to April 21, 1980 and that it had
acquired the subject building on September 13, 1985. The owner
further stated that it was unaware of the date of decontrol and that
it would be unreasonable for the DHCR to require additional leases
to determine the stabilized rent.
In Order Number CDR 30,817, herein under review, the Rent
Administrator established the lawful rent pursuant to Section 42A of
the prior Code. Overcharges were completed therefrom. In addition,
the Administrator determined that pursuant to Section 2526.1(f) of
the current Code, the current owner-petitioner was obligated to
refund or credit all overcharges collected on or after April 1,
1984, totalling $3,588.25, including interest and excess security.
Docket Number: BG-410291-RO
The Order listed several prior owners and directed them to refund
the overcharges they collected through March 31, 1984. No
allocation of those overcharges was stated in the order.
In this petition, the current owner contends that the Rent
Administrator's Order is incorrect and should be modified because,
although the Code in effect at the time the order was issued
provided that a current owner was responsible for all overcharges
collected on or after April 1, 1984, the Code in effect at the time
the complaint was both filed and answered made no such provision.
The owner contends that the application "of the new rules regarding
responsibility for overcharges in cases such as the present one has
the unconscionable result of increasing an owner's potential
liability without prior notice and after an answer has already been
filed." However, the owner does not deny the overcharge or contest
the Administrator's computation thereof.
The tenant did not answer the petition, although given the
opportunity to do so.
The Commissioner is of the opinion that this petition should be
As the owner concedes, Section 2526.1(f) of the current code
(effective May 1, 1987) provides that a current owner shall be
liable for all overcharges collected on or after April 1, 1984,
regardless of when the complaint was filed and regardless of whether
or not a prior owner collected all or part of those overcharges. In
effect, the owner is asking the Commissioner to find that Code
Section invalid. This the Commissioner cannot do.
The current Code was promulgated pursuant to Chapter 888 of the Laws
of New York for the year 1985. In particular, extensive public
hearings were held at which owners, tenants, the Bar, and other
interested persons were given the opportunity to comment on the Code
and to suggest changes. Once properly promulgated, the Law imposes
the duty on the Division to enforce the Code. The Commissioner can
not invalidate a Code provision. Such an invalidation would require
an amendment of the Code which can only be accomplished pursuant to
Chapter 888 of the Law of 1985 or as otherwise provided by the State
Administrative Procedure Act. See Code Section 2520.8.
Furthermore, the Commissioner finds that the Code Section in
question is proper both on equitable and policy grounds. Indeed in
Greenthal v. DHCR, 484 N.Y.S. 2d 445 (Sup.1984), the Court held that
a new stabilized owner could be held liable for overcharges
collected by a prior owner. The Court noted that that was the
policy under Rent Control and found no reason not to apply the
reasoning of the Appellate Term in Coulston v. Singer, 384 N.Y.S.
2d 74 [1st Dept. 1976], a Rent Control case, in which the court
allowed a tenant to credit overcharges collected by a prior owner
against the current owner. The court reasoned that to not allow
such a credit could frustrate the policies underlying the rent
regulation laws and give rise to extensive abuses by way of
questionable transfers of property for purposes of evading redress
The Court further found that a purchasing owner could protect itself
by including "appropriate protective provisions for contingencies
Docket Number: BG-410291-RO
incidental" to regulated premises and that failure to do so "is
clearly no basis for imposing unintended burdens or limitations upon
the statutory rights of the tenant who was a wholly innocent and
powerless bystander in the transfer of the property."
The Commissioner notes that the Greenthal decision was issued on
December 26, 1984, long before the owner herein purchased the
subject premises on September 13, 1985. Furthermore, it is
important to note that the Court therein was upholding a CAB
decision decided under the former Code.
This order may, upon the expiration of the period in which the owner
may institute a proceeding pursuant to Article seventy-eight of the
civil practice law and rules, be filed and enforced by the tenant in
the same manner as a judgment or not in excess of twenty percent
thereof per month may be offset against any rent thereafter due the
THEREFORE, in accordance with the Rent Stabilization Law and Code,
ORDERED, that this petition be, and the same hereby is, denied, and
the Rent Administrator's order be, and the same hereby is, affirmed.