Docket No. BJ 430192-RO
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                              JAMAICA, NEW YORK   11433

          APPEAL OF                               DOCKET NO.: BJ 430192-RO

                                                  DRO DOCKET NO.: 
             GRAHAM COURT OWNERS CORP.,           L-3111326-R; CDR 31,277

                                                  TENANT: Wesley Casey

                                       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

          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 

          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

          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

          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

          The tenant  may  commence  an  action  in  a  court  of  competent
          jurisdiction to collect the remaining overcharges from  the  prior


                                          JOSEPH D'AGOSTA
                                          Deputy Commissioner

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