BH 210168 RO

                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          APPEAL OF                             DOCKET NO.: BH 210168 RO

                                                DISTRICT RENT OFFICE
                                                DOCKET NO.: TC-082888-G
          BETSY POUNDER d/b/a BETTERON/et al,
                                                TENANT: DOUGLAS HUNT          


          On August 6,  1987, the above-named owner filed a Petition for 
          Administrative Review of an order issued on July 3, 1987, by the 
          Rent Administrator concerning the housing accommodations known as 
          1004 Union Street, Brooklyn, New York, Apartment No. 4A, wherein 
          the Rent Administrator determined that the owner had overcharged 
          the tenant.

          The Administrative Appeal is being determined pursuant to the 
          provisions of Section 2526.1 of the Rent Stabilization Code.

          The issue herein is whether the Rent Administrator's order was 

          The Commissioner has reviewed all of the evidence in the record and 
          has carefully considered that portion of the record relevant to the 
          issue raised by the administrative appeal.  

          This proceeding was originally commenced by the filing on March 2, 
          1984 of a rent overcharge complaint by the tenant.

          A rental history dating back to January 1, 1983 was submitted to 
          the Division.

          In Order Number TC-082888-G, the Rent Administrator determined 
          that, due to the owner's failure to submit a complete rental 
          history, the lawful stabilization rent was calculated using the 
          default procedure, effecting a rent overcharge of $8,702.24, 
          including excess security and interest on that portion of 
          overcharges occurring on and after April 1, 1984.

          In this petition, the owner requests reversal of the Rent 
          Administrator's order and contends in substance that, among other 
          things, there is no legal basis in the Division's requirement that 
          the owner submit a rental history dating back to June 30, 1974, but 
          that said owner is legally bound to produce to the Division a 
          rental history dating back only four years.  The owner submitted 
          with its petition a rental history from December 1, 1980 and a 

          BH 210168 RO

          Report of Statutory Decontrol showing that the tenant who commenced 
          occupancy on December 1, 1980 was the first rent stabilized tenant.

          The Commissioner is of the opinion that this petition should be 

          Section 42A of the former Rent Stabilization Code requires that an 
          owner retain complete records for each stabilized apartment in 
          effect from June 30, 1974 (or the date the apartment became subject 
          to rent stabilization, if later) to date and to produce such 
          records to the DHCR upon demand.

          Section 26-516 of Rent Stabilization Law, effective April 1, 1984, 
          limited an owner's obligation to provide rent records by providing 
          that an owner may not be required to maintain or produce rent 
          records for more than 4 years prior to the most recent 
          registration, and concomitantly, established a 4 year limitation on 
          the calculation of rent overcharges.

          It has been the DHCR's policy that overcharge complaints filed 
          prior to April 1, 1984 are to be processed pursuant to the law or 
          Code in effect on March 31, 1984.  (See Section 2526.1(a)(4) of the 
          current Rent Stabilization Code.)  The DHCR has therefore applied 
          Section 42A of the former Code to overcharge complaints filed prior 
          to April 1, 1984, requiring complete rent records in these cases.  
          In following this policy, the DHCR has sought to be consistent with 
          the legislative intent of the Omnibus Housing Act (Chapter 403, 
          Laws of 1983), as implemented by the New York City Conciliation and 
          Appeals Board (CAB), the predecessor agency to the DHCR, to 
          determine rent overcharge complaints filed with the CAB prior to 
          April 1, 1984 by applying the law in effect at the time such 
          complaints were filed so as not to deprive such tenants of their 
          right to have the lawful stabilized rent determined from the June 
          30, 1974 base date and so as not to deprive tenants whose 
          overcharge claims accrued more than 4 years prior to April 1, 1984 
          of their right to recover such overcharges.  In such cases, if the 
          owner failed to produce the required rent records, the lawful 
          stabilized rent would be determined pursuant to the default 
          procedure approved by the Court of Appeals in 61 Jane Street 
          Associates v. CAB, 65 N.Y.2d 898, 493 N.Y.S.2d 455 (1985).

          However, it has recently been held in the case of J.R.D. Mgt. v. 
          Eimicke, 148 A.D.2d 610, 539 N.Y.S.2d 667 (App. Div. 2d Dep't 
          1989), motion for leave to reargue or for leave to appeal to the 
          Court of Appeals denied (App. Div. 2d Dep't, N.Y.L.J., June 28, 
          1989, p.25, col. 1), motion for leave to appeal to the Court of 
          Appeals denied (Court of Appeals, N.Y.L.J., Nov. 24, 1989, p. 24, 
          col. 4), motion for leave to reargue denied (Court of Appeals, 
          N.Y.L.J., Feb 15, 1990, p. 25, col. 1), that the law in effect at 
          the time of the determination of the administrative complaint 
          rather than the law in effect at the time of the filing of the 
          complaint must be applied and that the DHCR could not require an 
          owner to produce more than 4 years of rent records.

          Since the issuance of the decision in JRD, the Appellate Division, 
          First Department, in the case of Lavanant v. DHCR, 148 A.D. 2d 185, 
          544 N.Y.S.2d 331 (App. Div. 1st Dep't 1989), has issued a decision 
          in direct conflict with the holding in JRD.  The Lavanant court 

          BH 210168 RO

          expressly rejected the JRD ruling, finding that the DHCR may 
          properly require an owner to submit complete rent records, rather 
          than records for just four years, and that such requirement is both 
          rational and supported by the law and legislative history of the 
          Omnibus Housing Act.

          Since in the instant case the subject dwelling unit is located in 
          the Second Department, the DHCR is constrained to follow the JRD 
          decision in determining the tenant's overcharge complaint, limiting 
          the requirement for rent records to April 1, 1980 (or the date 
          subject apartment became decontrolled, if later).

          An examination of the record in the instant case discloses  that in 
          the prior proceeding the owner failed to submit a rent history 
          dating back to December 1, 1980, the date the subject apartment 
          became decontrolled.  However, a Final Notice of Pending Default 
          granting the owner a final opportunity to submit the requisite 
          rental history was not sent to the correct owner.  Inasmuch as the 
          owner was denied due process, the Commissioner finds that said 
          owner cannot be held to have defaulted and that, therefore, the 
          Rent Administrator's use of the Default Procedure used in the 
          calculation of the lawful stabilization rent for the subject 
          apartment is not warranted.  Accordingly, the Commissioner deems it 
          appropriate that the requisite rental history submitted by the 
          owner in its appeal be considered herein.

          The record discloses that, for the period December 1, 1980 through 
          August 31, 1986, the last date used in the Administrator's 
          calculations, there is no evidence that the tenant paid any excess 
          in rents lawfully allowed under the applicable rent guidelines.

          Therefore, the Administrator's order finding a rent overcharge must 
          be revoked.

          If the owner has already complied with the Rent Administrator's 
          order and there are arrears due to the owner as a result of the 
          instant determination, the tenant is permitted to pay off the 
          arrears in 24 equal monthly installments.  Should the tenant vacate 
          after the issuance of this order or have already vacated, said 
          arrears shall be payable immediately.

          THEREFORE, in accordance with the provisions of the Rent 
          Stabilization Law and Code, it is

          ORDERED, that this petition for administrative review be, and the 
          same hereby is, granted, that the order of the Rent Administrator 

          BH 210168 RO

          be, and the same hereby is, revoked, and it is found that no rent 
          overcharge occurred.

                                          JOSEPH A. D'AGOSTA
                                          Acting Deputy Commissioner


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