ADM. REVIEW DOCKET NOS. BK 110252-RO & BJ 110332-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

          ------------------------------------X 
          IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
          APPEAL OF                              DOCKET NOS.:  BK  110252-RO
                                                               BJ 110332-RO
                                              :     D.R.O.    ORDER     NO.:
                                                 CDR                  31,481
            MORDECHAI E. NEUSTEIN/                              
            SHEFA REALTY CORP.                                      
                                                 Tenant:  Donald C.  Paddock
                                                                            
                                 PETITIONERS  :  
          ------------------------------------X 

            ORDER AND OPINION DENYING PETITIONS FOR ADMINISTRATIVE REVIEW

               These petitions  have  been  consolidated  pursuant  to  Code
          Section 2529.1(C) as they involve common issues of law and fact.

               On October 29, 1987, the above-named  petitioner-owner  filed
          Petitions for Administrative Review against  an  order  issued  on
          October 5, 1987, by the Rent Administrator,  10  Columbus  Circle,
          New York, New York, concerning  housing  accommodations  known  as
          Apartment 1D, 115-25 84th Avenue, Richmond Hill, New York, wherein 
          the  Rent  Administrator  determined  that  there  had   been   an
          overcharge and ordered a refund  of  $2,208.60,  including  excess
          security. 

               In an  order  bearing  docket  number  BJ  110332-RO,  issued
          November 30, 1987,  the  petition  with  that  docket  number  was
          rejected.  However, in  an  order  issued  January  6,  1988,  the
          November 30, 1987 order was revoked and the  petition  was  deemed
          "properly refiled under Docket Number BJ 110332-RO."  Petition  BK
          110252-RO is a duplicate.

               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 tenant commenced this proceeding on February 7,  1984  by
          filing an overcharge complaint with the New York City Conciliation 






          ADM. REVIEW DOCKET NOS. BK 110252-RO & BJ 110332-RO
          and  Appeals  Board  (CAB),  the  agency  formerly  charged   with
          enforcing the Rent Stabilization Law, based in part on an  alleged
          failure by the owner to provide a complete  rental  history.   The
          tenant submitted a copy of his initial lease, commencing August 1, 
          1983 and containing a Rent Guidelines Rider whereby the parties 
          agreed, inter alia, to be bound by orders of the CAB and  also  an
          Interim Lease Rider indicating the lease  would  expire  when  the
          tenant closed on  the  apartment  which  was  being  converted  to
          cooperative ownership.       

               In a letter dated August 25, 1984, the owner stated that  the
          apartment was then a cooperative and that  major  renovations  had
          been made thereto.  The owner asked for a twenty day extension  to
          "compile all bills and cancelled checks." 

               On July 21, 1986, the owner was served with a second copy  of
          the tenant's complaint.

               In an  answer  dated  September  25,  1986  the  owner  again
          contended that the subject  apartment  was  not  subject  to  Rent
          Stabilization because the building was owned as a cooperative  and
          the complaining tenant had only occupied the  apartment  prior  to
          conversion pursuant to an Interim Lease.  In addition,  the  owner
          alleged that the apartment had been renovated at a cost in  excess
          of $10,000.00. 

               On June 22, 1987 the owner was requested to submit  the  date
          the  tenant  purchased  his  apartment  as  well  as   bills   for
          renovations done to the apartment.

               In a letter dated June 30, 1987, the owner  stated  that  the
          tenant had purchased the co-op  in  March,  1984.   Regarding  the
          requested bills, the owner stated they had been in storage "for  a
          while" and that when  the  owner's  secretary  returned  from  her
          vacation, during the week of Labor Day, she would be instructed to 
          submit all relevant bills and documents.  An extension of time was 
          requested, but no date for a new due date was specified.   

               In a letter dated August 24, 1987, the owner asked  how  long
          the extension of time would last.  Again, no specific deadline was 
          requested. 

               This letter was apparently not answered.  Nor did  the  owner
          submit any documentation of the alleged renovations. 

               In Order Number CDR 31,481, issued October 5, 1987, the  Rent
          Administrator  determined  that  the  owner  was  in  default  and
          established the stabilized rent pursuant to former Code Section 






          42A.  Overcharges were computed for the eight  month  period  from
          August 1, 1983 through March 31, 1984, being the period  from  the
          commencement date of the tenant's lease through  the  end  of  the
          month in which the owner alleged the apartment  was  bought  as  a
          cooperative.






          ADM. REVIEW DOCKET NOS. BK 110252-RO & BJ 110332-RO

               In  these  petitions,  the  owner  contends  that  the   Rent
          Administrator's Order is incorrect and should be modified  because
          the apartment was not subject to Stabilization since  the  tenancy
          was  pursuant  to  an  Interim  Lease  in   conjunction   with   a
          cooperative conversion.  In addition, the owner alleges the 
          apartment had been renovated for $13,010.01, for which  the  owner
          submits copies of invoices.  Finally, the owner submits copies  of
          its August 25, 1984 and June 30, 1987 requests for  extensions  of
          time in which to answer and, in effect, argues that its failure to 
          submit the invoices for the renovations to the  Administrator  was
          due to the fact that the proceeding "dates back  to  '83  and  was
          filed in one of the chambers for 'dead files'...[access to  which]
          was a bit of a complicated  procedure....   The  complication  was
          compounded by the fact that the agent in  charge  of  this  entire
          case was away for over two months ... to September  10,  '87  ....
          It is also important to  remember  that  we  were  closed  for  12
          business days on account of [religious holidays] which  definitely
          contributed to the delay in responding to you with  these  facts."
                  
               The owner submits no documentation of  the  prior  rents  for
          the subject apartment, nor any explanation for the  lack  of  such
          documentation.

               The tenant  did  not  file  an  answer  to  these  petitions,
          although given the opportunity to do so.

               The Commissioner is  of  the  opinion  that  these  petitions
          should be denied. 

               The owner's contention that the  subject  apartment  was  not
          subject to the Stabilization Law because the tenant took occupancy 
          under an Interim Lease in conjunction with a co-op  conversion  is
          without merit.  As stated above, the lease itself contained a Rent 
          Guidelines  Rider,  which  is  applicable   only   to   stabilized
          apartments.    More   importantly,   Code   Section   2522.5(h)(4)
          explicitly includes apartments rented pursuant to Interim  Leases.
          This Section codified the long standing policy of the Division  on
          this issue.  Furthermore, Section 2(f) of the former Code, as well 
          as Section 2520.11(l) of the current Code, excludes from  coverage
          under Rent Stabilization those buildings  owned  as  cooperatives.
          However, until the time that the ownership passes from  the  prior
          owner or sponsor  to  the  cooperative  corporation  there  is  no
          exclusion from Rent Stabilization.  Moreover, Section  2522.(h)(5)
          excludes from Stabilization  coverage  only  those  new  tenancies
          which commence after the co-op plan is declared  effective  and  a
          closing (i.e. transfer of ownership of the building to  the  co-op
          corporation) has occurred.   However,  tenancies  commenced  under
          interim leases are covered by the Rent Stabilization Law until the 


          tenant closes  on  the  individual  apartment,  even  though  such
          individual closing is subsequent to the transfer of  the  building
          to the co-op corporation.      

               According to information on file at the office of  the  State
          Attorney General, the proposed offering plan ("Red  Herring")  was
          filed in July, 1981.  It was accepted  for  filing  in  July  1982
          ("black  book")  and  became  effective  on  December   6,   1983.






          ADM. REVIEW DOCKET NOS. BK 110252-RO & BJ 110332-RO
          Accordingly, since the  complaining  tenant's  interim  lease  was
          commenced  in  August,  1983,  the  apartment   was   subject   to
          Stabilization  until  the  tenant  purchased  the  shares  to  the
          apartment in March of 1984. 

               An administrative appeal is not a de novo proceeding, but  is
          limited  to  the  evidence  and  issues  which  were  before   the
          Administrator.    Accordingly,   the   owner's    submission    of
          documentation  on  appeal  which  was   not   submitted   to   the
          Administrator can be considered only  if  the  owner  demonstrates
          good  cause  for  not  having  submitted  the  evidence   to   the
          Administrator.  The Commissioner hereby finds that the  owner  has
          failed to show such good cause.    

               On  August  25,  1984,  more  than  three  years  before  the
          Administrator's order was issued, the owner requested  "a  minimum
          of twenty days more" "to compile the bills and cancelled  checks."
          No such documentation was thereafter submitted.  Accordingly, when 
          the owner requested (on June 30, 1987) a further extension of time 
          the Administrator could properly have denied the request based  on
          the owner's failure to submit  the  material  following  the  1984
          request for an extension.  Moreover, the request could  have  been
          denied as clearly excessive on its face, i.e., the owner requested 
          an extension to an unspecified date after Labor Day, September  7,
          1987, i.e., over a two month extension, based on  his  secretary's
          alleged vacation.  Clearly, the owner could  have  complied  in  a
          timely fashion by simply asking the secretary where the  materials
          were located.  Instead, the Administrator did not issue  an  order
          until October 5, 1987, four weeks after Labor  Day,  three  months
          after the second extension was requested, and  three  years  after
          the first extension was  requested,  to  issue  the  order  herein
          appealed.  (This was 25 days after the  owner  alleges  on  appeal
          that his "agent in charge  of  this  entire  case"  returned  from
          vacation.)     

               The fact that the owner requested on August 27,  1987  to  be
          informed of the duration of the extension  does  not  change  this
          result.  The August 27, 1987 letter did not state any reason, such 
          as religious holidays, why the materials could  not  be  submitted
          within a short time after the secretary's alleged return date  the
          week of Labor Day.  (The petition was submitted  only  twenty-four
          days  after  the  order  was  issued  and  included  the   owner's
          documentation.)     





               For the reasons stated above, the Commissioner finds that the 
          owner's documentation of alleged improvements is beyond the  scope
          of review.  

               This order may, upon the expiration of the  period  in  which
          the owner may institute a proceeding pursuant to Artic e  seventy-
          eight of the civil practice law and rules, be filed  and  enforced
          by the tenant in the same manner as a judgment.

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






          ADM. REVIEW DOCKET NOS. BK 110252-RO & BJ 110332-RO

               ORDERED, that these petitions be, and the  same  hereby  are,
          denied and the Rent Administrator's order be, and the same  hereby
          is, affirmed. 

          ISSUED:







                                                                        
                                          ELLIOT SANDER
                                          Deputy Commissioner



                                          






























    

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