BH 410059 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 410059 RO

                                                  DRO DOCKET NO.: CDR 30,834
                                                  TENANTS:  DONALD KITCHEN/
                                                            LAUREL BOWERS


          On August 10, 1987,  the  above-named  petitioner-owner  filed  a
          Petition for Administrative Review against  an  order  issued  on
          July 8, 1987, by the Rent Administrator, 10 Columbus Circle,  New
          York,  New  York,  concerning  housing  accommodations  known  as
          Apartment 12-H, 752 West End Avenue, New York, New York,  wherein 
          the  Rent  Administrator  determined  that  there  had  been   an
          overcharge and ordered a refund of $4,495.15, 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 tenants commenced this proceeding  on  February  3,  1984  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  the
          allegation that the owner retained the sublet allowance  paid  by
          the former prime tenant as part of the base rent  when  computing
          the rent for the complainant's initial prime lease.  (The tenants 
          had been the subtenants of the prior prime tenant.)

          In answer to  the  complaint,  the  owner  did  not  dispute  the
          allegations of the tenants.

          In  Order  Number  CDR  30,834  herein  under  review,  the  Rent

          BH 410059 RO
          Administrator computed the complainant's initial prime lease rent 
          from the prior rent minus the sublet allowance.

          In  this   petition,   the   owner   contends   that   the   Rent
          Administrator's Order is incorrect and should be modified because 
          it had been proper for the owner to include the sublet  allowance
          in the rent when computing the tenants' initial prime lease rent.

          In answer to this petition, the tenants contend  that  the  order
          should be upheld because in  a  letter  dated  August  18,  1982,
          addressed to the former prime tenant, the owner stated  that  the
          sublet allowance would last for the  duration  of  the  sublease.
          Accordingly, the tenants argue that it should not have been  part
          of the base rent when their initial prime rent was computed.

          The Commissioner is of the  opinion  that  this  petition  should

          Section 21B of the former Code allows  an  owner  to  increase  a
          renewal rent by the then-applicable vacancy allowance at the time 
          the apartment is subletted.  The Section  further  provides  that
          "upon termination of the sublease the  stabilization  rent  shall
          revert to the renewal lease basis."  Division  policy,  inherited
          from the CAB, is that this reversion of  the  rent  was  for  the
          protection of the prime tenant.  That  is,  to  limit  the  prime
          tenant's payment of the sublet allowance to the period  when  the
          apartment was actually subletted.  However, when the prime tenant 
          vacates and the subtenant becomes the new prime tenant, the  need
          for such protection no longer exists.  See CAB Opinion Number 15, 
          778, as amended.  In effect, the  sublet  allowance  becomes  the
          vacancy allowance for the new tenants, as of the  date  of  their

          The Commissioner notes that at the  commencement  of  the  former
          subtenants' initial prime lease, the Guidelines Order  in  effect
          made no provision for a vacancy  allowance  over  and  above  the
          increase allowed for a renewal lease.  Accordingly,  the  tenants
          herein have not received two vacancy allowances.

          Based on the above discussion, the Commissioner finds  there  was
          no overcharge.  The sublease rent with the sublet  allowance  was
          $618.04.  When increased  by  7%  for  a  two  year  lease  under
          Guidelines Order Number Fourteen the lawful first prime rent  for
          the former subtenants is found to be $661.30, the  rent  actually

          If the owner has already complied with the Administrator's  Order
          and, as a result of the instant determination, there are  arrears
          due to the owner from the tenants, the tenants may  pay  off  the
          arrears in twenty-four equal monthly installments during the next 
          twenty-four months.  Should the tenants vacate after the issuance 
          of the Order, all arrears are due immediately.

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

          ORDERED, that this petition be, and the same hereby  is,  granted

          BH 410059 RO
          and the Rent Administrator's order be, and the  same  hereby  is,
          modified in accordance with this Order and Opinion to  show  that
          there was no overcharge.

                                                  ELLIOT SANDER
                                                  Deputy Commissioner

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