BC410346RO and BC410149RO
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 APPEAL
APPEAL OF DOCKET NOS. BC410346RO and
Midtown Manor Apartments Ltd.
and Majorie L. Rosenthal, DISTRICT RENT OFFICE
DOCKET NO. L3117990R,
ORDER AND OPINION REMANDING PROCEEDING ON APPEAL
The above-named petitioners each timely filed a Petition for
Administrative Review against an order issued on February 18, 1987 by
the Rent Administrator at 10 Columbus Circle, New York, New York
concerning the housing accommodations known as 221 East 35th Street,
New York, Apartment 5D, wherein the Administrator established the
stabilized rent and directed the owner to refund $39,795.55 including
treble damages from April 1, 1984.
The petition fled by Midtown Manor apartments Ltd. was assigned Docket
No. BC410346RO. The petition filed by Marjorie L. Rosenthal was
assigned Docket No. BC410149RO. Pursuant to section 2529.1(c) of the
Code effective May 1, 1987, those petitions are consolidated herein.
The Commissioner notes that these proceedings were initiated prior to
April 1, 1984. Sections 2526.1(a)(4) and 2521.(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 in the administrative appeal.
This proceeding was originally commenced on March 16, 1984, by the
filing of a complaint of rent overcharge and a Fair Market Rent Appeal
(FMRA) with the New York City Conciliation and Appeals Board (CAB, the
agency formerly charged with enforcing the Rent Stabilization Law) by
the tenants, Beverly and Morrow Wilson. The tenants subsequently
supplemented their overcharge complaint and FMRA with additional
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documents and alleged, in substance, that they first took occupancy on
May 1, 1980 under a lease whose term commenced on May 1, 1980 and
expired on April 30, 1983 and which provided for a monthly rent of
$650.00 for the first year, $670.00 for the second year and $690.00 for
the third, but under which they had only been charged $650.00 and that
on March 16, 1984, the rent was $650.00. The tenants also submitted
documents and information that showed that the prior tenant had been
rent controlled and that the Maximum Base Rent Order issued for this
apartment on February 20, 1974, effective January 1, 1972, fixed the
Maximum Base Rent for the apartment at $235.73 and the maximum
collectible rent at $160.61. The tenants also indicated that their rent
was increased on October 29, 1984 from $650.00 to $695.30 under a
renewal lease whose term commenced on November 1, 1984 and expired on
October 31, 1986.
The answer submitted by the current owner, Marjorie L. Rosenthal,
essentially confirmed the facts as set forth in the tenants'
submissions, but added the allegation that the prior owner, Gelfra II
Realty Corp. had served a DC-2 notice on the tenants by certified mail
dated April 28, 1980. The current owner attached a purported copy of
said DC-2 notice (which reported a 1974 MBR of $255.79 for the subject
apartment) and a purported copy of the certified mail, mailing receipt
obtained when the DC-2 was mailed.
In the appealed order, the Administrator stated that the owner had
failed to submit a complete rental history and the Administrator
employed a default procedure to determine the stabilized rent and the
overcharges to be refunded.
With its petition, Midtown Manor Apartments, Ltd., submitted an
affidavit by Rina Frankola, wherein said deponent stated that she is the
managing agent for Midtown Manor Apartments, Ltd. ("Midtown") which is
a cooperative corporation and not the owner of apartment 5-D; that
Midtown was served with the complaint and Final Notice of Pending
Default and it forwarded both documents to the apartment's owner,
Marjorie L. Rosenthal. The deponent further asserts that since Midtown
is not the owner of apartment 5-D, it should not be a party to these
proceedings. Said affidavit did not corroborate Rosenthal's statement
below concerning the service of the DC-2.
In her petition the current owner stated in substance that the Rent
Administrator's default order was unwarranted because a full rental
history was before the Rent Administrator; that a challenge to the
initial rent was untimely because it was in excess of 90 days after
certified mail service of a DC-2 notice on the tenants dated April 28,
1980 by the prior owner and Midtown Manor was not an owner of the
apartment nor a proper party to the proceeding.
With the petition, the current owner submitted a copy of the DC-2 notice
and certified mail receipt.
BC410346RO and BC410149RO
In response to the petitions, the tenants stated in substance that they
never received the DC-2 notice; that Riva Frankola who is the agent for
Midtown Manor was one of the prior owners; that Midtown Manor was a
proper party to the proceedings; and that the Rent Administrator's order
should be upheld.
The Commissioner is of the opinion that these matters should be remanded
to the Administrator for further, appropriate processing.
Section 25(B) of the Rent Stabilization Code (hereafter RSC) provides in
pertinent part that an application challenging the initial stabilized
rent on the basis that it exceeds the fair market rent must be filed by
a tenant within 90 days after the tenant receives the initial legal
regulated rent notice.
Section 26 of the RSC directs the owner to serve such initial legal
regulated rent notice certified mail.
Section 42A provides in pertinent part that the owner shall be required
to exhibit to a tenant of a dwelling unit which becomes subject to the
Rent Stabilization Law after July 1, 1974 . . . . a copy of the first
lease in effect after the dwelling unit becomes subject to the Rent
Stabilization Law ad any lease or order subsequent thereto . . ."
A review of the records in this case and rent control records on file
with DHCR discloses that the tenants were the first rent stabilized
tenants and took occupancy of the subject apartment on May 1, 1980; that
a complete rental history in accordance with Section 42A was before the
Rent Administrator; that a copy of the DC-2 notice and certified proof
of service dated April 28, 1980 was never served on the tenants during
the proceeding before the Rent Administrator nor were the tenants given
an opportunity to respond thereto below; that Frank Frankola signed the
DC-2 notice cited above; that either Frank or Rita Frankola is listed as
the owner or MBR Eligibility orders from 1980 - 87; that a change of
owner form (Form R44) was filed with DHCR in November, 1977 indicating
a transfer of ownership from Midtown Apartments Associates to Gelfra II
Realty Corp. signed by F. Frankola; that a change of owner form (R44)
was filed in February 1984 indicating a transfer of ownership from "Rina
and Feruuo Frankola" to Midtown Manor Apartments, Ltd.; and that Midtown
Manor Apartments is listed as the owner and Rita Frankola as the manager
in all registrations on file with DHCR from 1984 - 1992.
The Commissioner finds that the Administrator had a complete rental
history before him since the tenants herein were the first rent
stabilized tenants; that the tenants had filed a challenge to the fair
market rent; and, therefore, the Administrator erred in utilizing a
default procedure and processing this case simply as an overcharge
Nevertheless, the Commissioner finds that the record herein is
inadequate to determine whether the FMRA was timely filed. Further,the
Commissioner notes that the record below indicates that there may have
BC410346RO and BC410149RO
been a substantial involvement and/or relationship between Frank and
Rina Frankola on the one hand and Gelfra II Realty Corp., a prior owner,
on the other. It is not clear from the record who are the proper
parties to the proceeding and whether these parties were served with and
given an opportunity to respond to the tenants' complaint.
Accordingly, the Commissioner determines that these proceedings should
be remanded to the Rent Administrator for further processing. Upon
remand, the question of the timeliness of the tenant's FMRA (that is,
whether the tenants were served with the DC2 notice in 1980 as alleged
by the owner and didn't timely file the FMRA or whether the tenants'
refutation of the receipt of the DC-2 notice is supported by the
evidence); as well as the question of the liability of Midtown Manor
Apartments and the connection, if any, between Midtown Manor Apartments
and the prior owner, Gelfra II Realty, should be investigated. A
hearing may be held, if warranted. If it is found that the FMRA was not
timely, then the FMRA should be dismissed and the tenants' overcharge
complaint processed on the merits utilizing the full rental history from
the time of initial occupancy by the tenants herein and not using the
THEREFORE, pursuant to the Rent Stabilization Law and Code, it is
ORDERED, that these petitions be, and the same hereby are, granted to
the extent of remanding these proceedings to the District Rent
Administrator for further processing in accordance with this order and
opinion. The Administrator's order is hereby revoked. Any arrears owed
by the tenants as an result of this order may be paid by the tenant to
the owner in
equal monthly installments over the course of the next twenty four
Joseph A. D'Agosta