Docket Number: BG-410291-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 410291-RO
          SWEET LOU ASSOCIATES,                DRO DOCKET  NO.:  CDR  30,817
                              PETITIONER    :  TENANT: EILEEN O'CONNOR

        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
        for overcharges.

        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,
        it is

        ORDERED, that this petition be, and the same hereby is, denied,  and
        the Rent Administrator's order be, and the same hereby is, affirmed.


                                        ELLIOT SANDER
                                        Deputy Commissioner


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