Docket No. BJ 430192-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.: BJ 430192-RO
DRO DOCKET NO.:
GRAHAM COURT OWNERS CORP., L-3111326-R; CDR 31,277
TENANT: Wesley Casey
PETITIONER
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART
On October 1, 1987 the above named petitioner-owner filed a
Petition for Administrative Review against an order of the Rent
Administrator issued September 3, 1987. The order concerned
housing accommodations known as Apt. 7G-1 located at 1925 Seventh
Avenue, New York, New York. The Administrator found that the
tenant had been overcharged in the amount of $7,817.26 including
interest and excess security.
The Commissioner has reviewed the record and carefully considered
that portion relevant to the issues raised by this administrative
appeal.
The Commissioner notes that this proceeding was filed 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 tenant commenced this proceeding by filing a rent overcharge
complaint on March 30, 1984 in which he alleged that he took
occupancy of the subject apartment on March 19, 1965 pursuant to a
three year lease at a rent of $150.00 per month. He indicated
that her rent was increased to $200.00 in December 1973, to
$230.00 in November 1976 and to $253.00 in July 1983. The owner
was requested to provide a full rental history and did, in fact,
provide one. The Administrator calculated an overcharge of
$7,817.26 including interest and excess security.
The owner was served with the complaint on September 14, 1984 but
did not respond. An answer to a "Final Notice of Pending Default"
was submitted by Foster and Medford Management on June 24, 1986 in
which they stated that they were appointed 7A Administrators on
May 1, 1981 and had no rent records. They did have a copy of a
rent roll from March 1979 which they submitted along with a
current rent roll.
Docket No. BJ 430192-RO
Using the rental history provided by the tenant in the complaint,
the Administrator determined an overcharge commencing with the
October 1, 1973 lease term, ordered a refund of $7,817.26
including excess security and interest on overcharges collected on
or after April 1, 1984, and established the lawful rent at $230.53
as of August 1, 1986 through July 31, 1986.
On appeal, the petitioner argues that it is not responsible for
any overcharges. The petitioner explains that 7A Administrators
were appointed by the Civil Court in January 1981 after the
tenants in the subject building suffered three months without
services. The 7A Administrators did not have access to all of the
records maintained by the owner of record and did not have
available to them prior leases. The rents charged were based on
records supplied by the Court and all rents collected were
accounted for by the 7A Administrators and were used first for the
benefit of the building to ensure that all essential services were
provided.
The petitioner states that the City of New York took back the
building from August 16, 1986 through February 12, 1987 for
failure to pay real estate taxes.
The new owner, as petitioner, argues that the Administrator should
not have ordered it to pay any of the overcharges since it was not
responsible for collecting the majority of overcharges.
The owner also claims that since the tenant was served with the
1984 registration, it was error to assess overcharges back to
1973.
In addition, since there was no intent to overcharges, treble
damages are not warranted.
The current owner states that it acquired the building at an in
rem sale from the city and should therefore be liable only for the
few months rent it actually collected from the time it acquired
the building in June 1987 until the Administrator's order was
issued.
In answer to the petition, the tenant asserts that the rent
overpayments determined by the Administrator were well documented
and should be affirmed.
After careful consideration of the evidence of record, the
Docket No. BJ 430192-RO
Commissioner is of the opinion that the petition should be granted
in part.
The overcharges determined by the Administrator was based on the
rental history information provided by the tenant which the 7A
Administrators (and the subsequent owner) were unable to rebut
because of an absence of rent records provided by the former
owner. Although the determination of the lawful rent made by the
Administrator should be affirmed, the petition is correct in its
assertion that it is responsible for refunding only those
overcharges it actually collected.
Section 2526.1(f) of the Rent Stabilization Code provides that a
current owner is responsible for all overcharge penalties
collected on or after April 1, 1984, including penalties based on
overcharges collected by a prior owner. This section further
provides that "in the absence of collusion or any relationship
between such owner and any prior owner, where no records
sufficient to establish the legal regulated rent were provided at
a judicial sale, a current owner who purchases upon such judicial
sale shall be liable only for his or her portion of the
overcharges, and shall not be liable for treble damages upon such
portion resulting from overcharges caused by a prior owner."
The petitioner herein has stated that it purchased the subject
building from the City of New York and the Division has confirmed
that the building was in rem prior to ownership by the current
owner. Acquiring in rem property is within the definition of a
purchase at a judicial sale such as to invoke the limitation on
liability provided in Section 2526.1(f). The petitioner therefore
is liable for $303.84 of the overcharges.
The owner is advised that the Administrator did not assess treble
damages so not modification to that aspect of the order is
warranted.
The tenant may commence an action in a court of competent
jurisdiction to collect the remaining overcharges from the prior
owner.
ISSUED:
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JOSEPH D'AGOSTA
Deputy Commissioner
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