BC410346RO and BC410149RO
                             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 APPEAL
      APPEAL OF                               DOCKET NOS. BC410346RO and
                                                          BC410149RO

           Midtown Manor Apartments Ltd.                     
           and Majorie L. Rosenthal,          DISTRICT RENT OFFICE
                                              DOCKET NO. L3117990R, 
                                                         CDR 20,061

                               PETITIONER
      ------------------------------------X

                 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 












          BC410346RO and BC410149RO

      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 
      proceeding.

      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 
      default procedure.

      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 
      months.


      ISSUED:

                                                                         
                                         Joseph A. D'Agosta
                                         Deputy Commissioner
    

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