ADM. REVIEW DOCKET NO.: BI 410117-RO
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
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IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: BI 410117-RO
D.R.O. ORDER NO.:
: CDR 31,025
Tenant: Andrea Grassi
CLAIRE MAYERS/LEBO REALTY CORP.,
PETITIONER :
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ORDER AND OPINION REMANDING PROCEEDING TO THE RENT ADMINISTRATOR
On September 14, 1987, the above named petitioner-owner filed
a Petition for Administrative Review against an order issued on
August 11, 1987, by the Rent Administrator, 10 Columbus Circle,
New York, New York, concerning housing accommodations known as 118
St. Marks Place, ground floor, New York, New York, wherein the
Rent Administrator determined that there had been no overcharge,
but that the apartment was used for both commercial and
residential use and therefore was subject to Rent Stabilization.
The Commissioner notes that this proceeding was initiated
prior to April 1, 1984. Section 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 October 13, 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 the
allegation that the owner was raising the rent from $325.00 to
$650.00 per month.
In answer to the complaint, the owner stated that the
premises rented by the tenant are not covered by Rent
ADM. REVIEW DOCKET NO.: BI 410117-RO
Stabilization because the space rented was a store and the tenant
"rented it as a store." The owner did not state whether or not
the tenant lived in the "store."
The owner attached page one of the tenant's lease which the
owner alleged "clearly indicates that he rented a store for use
as an art and sculpture studio." The portion of the lease
submitted refers to the rented space as "Ground Floor (store)" and
states that it is "to be used and occupied only for art studio,
sculpture work." (The phrase "to be used and occupied only for"
is part of the printed lease form, the remaining words just quoted
are hand-written.) The page contains a handwritten clause
allowing the tenant to install a shower at his own expense after
submitting plans from a licensed plumber to the owner.
In a reply dated December 8, 1983, the tenant alleged that
he had moved into the "apartment" in April 1979 when the subject
building was owned by a prior owner who at the time of the reply
still lived in the building. That tenancy was alleged to be an
oral lease for $300.00 per month. The current owner was alleged
to have bought the building in May of 1980.
The tenant enclosed a complete copy of the lease and alleged
that although he thought that use as an artist's studio implied
partial residential use, he wanted the lease to be absolutely
clear on this point. Accordingly, a rider to the lease contains
six clauses, the first five of which are regarding the right of
the tenant to use the premises as a residence. These five clauses
were crossed out by the owner. The change bears the owner's
initials but not the tenant's initials, although the rider is
signed by both parties. In his reply the tenant described the
owner's crossing out of the five clauses as follows: "The
landlord's position was that this degree of specificity was not
necessary and it therefore crossed it out." That is, the tenant
admitted that the five clauses were not part of the lease as
signed but argued that the crossing out of the residential clauses
did not constitute a denial of the tenant's right to continue to
live in the "apartment" -- which the tenant alleged he had done
for a year before the petitioner bought the building and for the
six months from the petitioner's purchase to the signing of the
lease in question.
The tenant further argued that the clause allowing a shower
and another clause allowing a pet both were "commensurate with use
and occupancy as a residence and not as a commercial store."
Furthermore, the tenant alleged the owner had been in his
"apartment" "on more than several occasions" and saw that it was
being used as a residence.
Finally, the tenant alleged that there was no certificate of
occupancy restricting the ground floor to commercial usage.
On January 3, 1984, the owner responded to the tenant's
reply. The owner agreed there was no certificate of occupancy,
because the building was built prior to 1901 when it was
classified as "Old Law Tenement." However, a 1936 alteration
permit shows the classification to be "Five Story Brick store and
ADM. REVIEW DOCKET NO.: BI 410117-RO
Eight Family Dwelling," and no changes in classification have
occurred since that time.
The owner emphasized that the January 21, 1981 lease
contained no residential clauses and the tenant's attempt to
introduce such clauses was denied by the owner at which time the
owner "verbally objected to his living in the premises."
The owner stated that : (1) the store has no kitchen
facilities and is not equipped for living purposes; (2) the store
has no hot water; (3) the owner refused permission to install a
kitchen; (4) the premises has a toilet but no bathroom; (5) the
permission given to install a shower was contingent on the
owner's approval of plans by a licensed plumber and no such plans
were submitted so that the owner had no knowledge of the
installation of any shower.
Finally, the owner argued that any residential use has been
without the knowledge or acquiescence of the owner and the tenant
should not be unilaterally allowed to change the nature of the
tenancy.
On January 30, 1984, the tenant replied to the owner's
January 3, 1984 response. The tenant argued that the owner's
claim to have verbally objected to the tenant's living in the
"apartment" contradicted the owner's claim to have had no
knowledge of such use. Furthermore, the tenant denied that such
objections took place even though the owner visited the apartment
on "numerous occasions" and accepted the tenant's rent without
objection. In addition, the tenant alleged that the owner never
objected to the tenant's residential use in writing, so that the
owner had waived any such objection.
The tenant stated that he had hot and cold water, a simple
kitchen, consisting of a refrigerator, sink, counter, cabinets, a
kitchen table and chairs and a two burner hot plate.
Regarding the shower, the tenant stated the plumbing therefor
was already in place when he moved in and only needed to be
reconnected, which was done by a licensed plumber but did not
require any plans or permits.
The tenant denied that he had unilaterally changed the nature
of the tenancy, stating that the rear of the first floor "was
clearly used, even before I moved in, as an apartment. There is,
for example, a separate doorway leading directly into the
apartment building hallway, and in the bathroom plumbing and some
of the fixtures were still there when I first moved in." He added
that it would be impossible to live there without the knowledge of
the owners and in fact both owners had that knowledge and
consented to his living there, as evidenced by their acceptance of
his rent.
The tenant further argued that the fact that the owner
required a commercial lease and now claims non-residential use is
not determinative of the stabilization status of the "apartment."
ADM. REVIEW DOCKET NO.: BI 410117-RO
Finally, the tenant argued that even without the knowledge or
consent of the owner he should be covered by the Emergency Tenant
Protection Act of 1974 by virtue of Article 7C of the Multiple
Dwelling Law.
On November 14, 1984, the tenant filed a copy of a November
27, 1985 letter from the owner to the tenant, notifying the tenant
of a rent increase for a Major Capital Improvement (MCI)
consisting of storm windows. This letter is a form letter
apparently sent to all tenants in the building, with spaces left
to be filled in by hand for the recipient's name and the amount of
the increase for the recipient's apartment. (The word "apartment"
is crossed out and replaced by "store" in the complaining tenant's
copy.) In a May 28, 1986 letter the tenant, through his
attorney, argued that "the landlord is trying to get the best of
all possible worlds: firstly claiming that the tenant Grassi is
not a rent controlled (sic) tenant and then claiming that although
he is not a rent controlled or rent stabilized tenant he should be
liable for an increase based on major improvements." Attached to
this letter are three pages from the owner's November 26, 1984 MCI
application for new windows, bearing docket number LC 000212-OM,
and addressed to the complaining tenant. (The owner describes the
tenant's "apartment" as a "store" on this application.)
On April 9, 1987 the premises were inspected by the Division.
The inspector found that the unit consisted of a front room used
as a store or showroom with a workbench area and shelves
containing sculpture. The other half was found to be residential
with a "full kitchen" including a gas stove, refrigerator and
kitchen sink. The living space included a "living room area" and
"bedroom area" as well as a toilet and a shower stall. On the
back of the inspection report is a diagram of the premises. The
premises is shaped like a capital "F" with the store occupying the
top horizontal and half of the top vertical and the residential
area occupying the rest. At the right end of the lower horizontal
(the living room area) is a doorway labelled "apartment entrance
door." At the top of the upper horizontal area is the "store
entrance door" opening to St. Marks Place.
In Order Number CDR 31,025, herein under review, the Rent
Administrator determined that the unit was subject to Rent
Stabilization based on the Division's policy that a premises used
for both residential and commercial purposes is covered by Rent
Stabilization. The order did not address the owner's claim that
any residential use was without the knowledge or consent of the
owner. No overcharge was found.
In this petition, the owner contends that the Rent
Administrator's Order is incorrect and should be modified because
the Administrator should not have gone beyond finding that there
was no overcharge because the "question of the coverage [under
Rent Stabilization] of this unit was not before the agency." In
the alternative, the owner argues that even if the coverage issue
ADM. REVIEW DOCKET NO.: BI 410117-RO
was properly before the Administrator, the Administrator failed to
consider the owner's contention that "[i]f the tenant is using any
portion of the premises as a residence it is in violation of both
the law and the lease and was done without the knowledge or
approval of the owner...[but was] pursuant to a subterfuge
initiated by the tenant."
The owner argues that the tenant should not be allowed to
force the unit into stabilized status through the tenant's own
wrongdoing.
The owner further states, upon information and belief, that
"the tenant's cooking facility consists of a hot plate installed
by the tenant without the landlord's permission or knowledge."
The owner alleges that the tenant had represented that his need
for a shower was to clean up after sculpting, i.e., no permission
or knowledge of residential use should be inferred from the right
given to have a shower.
Finally, the petitioner distinguishes certain CAB Opinions
cited by the Administrator on the basis that they did not involve
a situation in which the unit was rented solely for commercial
purposes and in which all tenant requests for residential use were
denied.
The tenant did not answer the petition, although given the
opportunity to do so.
The Commissioner is of the opinion that this proceeding
should be remanded to the Administrator for further fact-finding,
including a hearing.
The owner's contention that the issue of coverage under the
Stabilization Law was not before the Administrator is clearly
without merit. Indeed, the owner raised this issue in its answer
to the complaint. However, the owner is correct that the
Administrator's order failed to discuss the issue of whether the
owner had knowledge of or consented to the partial residential use
of the ground floor unit, nor did any of the cases cited therein
deal with this issue. In general, if such usage under a
commercial lease was without the knowledge or consent of an owner,
the unit would not be stabilized. However, the fact that the
tenancy in this proceeding commenced under a prior owner
complicates the application of this general rule. For if the
prior owner had knowledge of and/or consented to the residential
use of the subject premises, the unit would have been stabilized
before the petitioner took ownership. In such a case, the
petitioner would be unable to remove the stabilized status of the
unit by requiring the tenant to sign a commercial lease.
In this proceeding the tenant has alleged that the prior
owner had knowledge of and consented to the residential usage.
However, even though the prior owner was still living in the
subject building at the time of the allegation, the tenant
submitted no evidence, such as a statement from that owner, to
support his allegation. Furthermore, even though the inspection
shows conclusively that the unit was used as a residence,
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including a stove, in April of 1987, the tenant had admitted
earlier that he cooked on a hot plate and it is, of course,
undisputed that there was no shower stall at the time the tenant's
initial lease with the petitioner commenced some six months after
the petitioner acquired the building. (The tenant was without a
lease under the prior owner.) Thus, in spite of the fact that
there is a door from the living room area to the apartment
building hallway, the Commissioner finds the record is
insufficient to determine whether the tenant lived in the
apartment under the prior owner and, if so, whether such use was
with the knowledge or approval of the prior owner. (Merely
sleeping on the premises occasionally does not constitute
residential use. See Administrative Review Docket Number ART
06400-L.)
On the other hand, long-standing Division policy dictates
that the mere fact that a lease states "for commercial use only"
does not remove an apartment from coverage under the Rent
Stabilization Law. Accordingly, the lease in this proceeding, by
itself, does not require a finding that the owner neither had
knowledge of nor consented to the residential usage. The
Commissioner finds that the shower and pet clauses are compatible
with either side in this dispute, especially in view of the
special nature of the tenant's profession.
Although the tenant has alleged that the owner had knowledge
of the residential usage, the owner has denied it and neither
party has offered any evidence of such knowledge or lack thereof.
If such knowledge were proved, the owner's acceptance of rent with
such knowledge would constitute a waiver of the lease's
prohibition against non-commercial usage and the apartment would
be stabilized even if the prior owner had not allowed residential
usage and/or even if there was no residential usage under the
prior owner.
Moreover, the Commissioner finds that the MCI application is
insufficient proof that the owner treated the apartment as
stabilized. The owner did not seek and the MCI order did not
grant, a rent increase for this tenant.
The Commissioner notes that this proceeding can not be
resolved by Article 7C of the Multiple Dwelling Law, the tenant's
contention to the contrary notwithstanding. Section 281.1 thereof
defines "interim multiple dwelling" to include only those
buildings or portions thereof which were or had been commercial
and since a certain date had been occupied residentially by three
or more independent families. In the subject building only the
ground floor ever had commercial status, the other apartments had
always been residential. Therefore, the three-family requirement
is not met. See Azizfard Trading Co. v. Smilovici, 480 N.Y.S. 2d
166 (1984).
Finally, the Commissioner notes that there is nothing in the
record to substantiate the owner's claim that the tenant's
residential use of the apartment violated any law. The owner
admits there is no Certificate of Occupancy for the building. The
March 14, 1980 report on this issue, attached to a Certificate and
ADM. REVIEW DOCKET NO.: BI 410117-RO
Report of Title submitted by the owner cites an alteration
application (1936) and a Housing Department inspection (1902)
which describe the building as a five story brick store and eight
family dwelling or a five story brick nine family dwelling
respectively. The 1902 inspection apparently did not mention a
store and the 1936 alteration application did not create a y use-
restrictions. Furthermore, regarding a partial commercial use in
violation of zoning laws a court noted that "illegality is not,
per se, one of the grounds for exemption from regulations set
forth in the [Rent Stabilization] statutes." [Citations omitted.]
The court further noted that "[a]s a matter of public policy, it
is by far the better approach to require a landlord who is
aggrieved by an illegal use to resort to a summary proceeding to
recover possession of the premises." Kace Realty Co. v. DHCR, 526
N.Y.S. 2d 337 (Sup. Ct., N.Y.Co., 1988).
THEREFORE, in accordance with the Rent Stabilization Law and
Code, it is
ORDERED, that this petition be, and the same hereby is,
granted to the extent of remanding this proceeding to the Rent
Administrator for further processing in accordance with this Order
and Opinion. The Rent Administrator's order shall remain in
effect until a new order is issued on remand.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
ADM. REVIEW DOCKET NO.: BI 410117-RO
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