BK210010RO; HK210009RP

                             STATE OF NEW YORK
                          OFFICE OF RENT ADMINISTRATION
                                   GERTZ PLAZA
                             92-31 UNION HALL STREET
                             JAMAICA, NEW YORK 11433

      APPEAL OF                              DOCKET NO. BK210010RO

           Hilda Geller, prior owner,     :  DISTRICT RENT OFFICE
                      and                    DOCKET NO. K3103315R
           Abraham Herzberg, owner,          
                                             TENANT: Mildred Flink            
                            PETITIONER    : 


      On November 6, 1987, the above-named petitioner-owner Abraham Herzberg 
      filed a Petition for Administrative Review against an order issued on   
      October 14, 1987, by the Rent Administrator concerning the housing 
      accommodations known as 1575 40th Street, Brooklyn, New York, Apartment 
      No. 3A, wherein the Rent Administrator determined that the owner had 
      overcharged the tenant.

      In an order and opinion issued on March 27, 1992 under Docket No. 
      BK210010RO, the Commissioner denied the current owner's petition.

      Subsequent thereto, the petitioner-prior owner Geller commenced a 
      proceeding in the Supreme Court pursuant to Article 78 of the Civil 
      Practice Law and Rules challenging the Commissioner's order and opinion 
      on various grounds, including that her own petition, which had been 
      timely filed on November 10, 1987, was not acted upon or included in the 
      Commissioner's order and opinion.  Pursuant to a stipulation agreement 
      between the parties, the instant proceeding was remitted to the DHCR for 
      further consideration.

      The Administrative Appeal is being determined pursuant to the provisions 
      of Section 2526.1 of the Rent Stabilization Code.

      The issue herein is whether the Rent Administrator's order was 

      This proceeding was commenced on March 25, 1984 by the tenant's filing 
      of a rent overcharge complaint wherein she contended in substance that

          BK210010RO; HK210009RP

      she commenced occupancy of the subject apartment in September of 1978 
      without a lease at a monthly rental of $170.00, and that this was 
      increased without a lease to $190.00 per month in 1981.

      The complaint was served on the then current owner, Geller, who was 
      requested to submit a complete rent history.  The record only contains 
      an affidavit from the tenant in occupancy from November 15, 1976 to May 
      30, 1979 stating that the rent for that period was $150.00 per month.

      On April 24, 1986 the tenant informed the Division that ownership of the 
      subject premises had changed as of July 1, 1985 with the new owner being 
      Abraham Herzberg.

      On August 18, 1987, the current owner was served with a copy of the 
      tenant's complaint.  On September 4, 1987, the current owner responded 
      by contending in substance that he bought the property in late 1985 and 
      did not have any rent records prior to that date.

      In Order Number CDR 31,592 issued October 14, 1987 the District Rent 
      Administrator determined that both the current and prior owners had 
      failed to submit a full rental history for the subject apartment, and 
      accordingly established the lawful stabilization rent as $152.47 (the 
      complaining tenant's initial rent minus a guidelines increase and 
      vacancy allowance).  The Administrator further determined that the 
      tenant had been overcharged from September 1, 1978 through September 30, 
      1986 in the amount of $2087.41, which included excess security and 
      interest on that portion for the overcharge occurring on or after April 
      1, 1984.

      In his petition appealing that order, the current owner contended that 
      it was improper to find the owner in default; that the Administrator 
      improperly extended the period of overcharges to September, 1986 even 
      though the tenant had vacated the apartment in March, 1986; that the 
      tenant failed to pay rent in January and February, 1986 prior to leaving 
      the apartment, but that, contrary to the order, the entire security 
      deposit was returned anyway.

      In the Order and Opinion issued on March 27, 1992, the Commissioner 
      denied the current owner's petition insofar as the finding that the 
      owner had defaulted was affirmed; however, in accordance with the JRD 
      decision, the requirement for submitting rent records was limited to 
      April 1, 1980, instead of June 30, 1974.  It was also found that the 
      Administrator had improperly calculated overcharges beyond February, 
      1986 even though the tenant had vacated in March, 1986.  The 
      Commissioner also determined that the subject apartment had never been 
      registered with the DHCR, but that the Administrator had incorrectly 
      failed to freeze the tenant's rent.  Proper calculation of the 
      overcharge would have resulted in an overcharge greater than the amount 
      determined by the Administrator.  In the absence of a PAR filed by the 
      tenant, however, the Commissioner limited the overcharge penalty to the 
      amount determined by the Administrator.

          BK210010RO; HK210009RP

      Subsequent thereto, the former owner filed an Article 78 petition 
      challenging the Commissioner's opinion.  The former owner contended that 
      the opinion was arbitrary and capricious because, in the first place, 
      the opinion stated that the subject apartment had never been registered, 
      when in fact it had; secondly, even though the respondent (Commissioner) 
      conceded that the owners had not defaulted because they had provided 
      rent records going back four years, which was all that was required, and 
      that the Administrator had thus improperly penalized the owner for 
      failing to submit rent records from June 30, 1974, respondent 
      nevertheless upheld the Administrator's penalties of the owner; and, 
      thirdly, the opinion totally ignored the petition that was properly and 
      timely filed by the former owner-petitioner.  Enclosed with the Article 
      78 petition were computer registration printouts from the DHCR record 
      system showing registration of the subject apartment for 1984, 1985 and 
      1986 and a copy of the prior owner's petition for administrative review 
      dated November 10, 1987.

      On August 19, 1992, pursuant to a stipulation agreement between the 
      parties, the Court remitted the proceeding to the DHCR for a new 
      determination on the merits.

      Upon examination of the record, it was discovered to contain an answer 
      from the tenant to the former owner's petition for administrative 
      review, indicating that such petition had in fact been filed, but was 
      never docketed.  Therefore the former owner's petition will be 
      consolidated with the current owner's petition and will be considered at 
      this time.

      The prior owner, H. Geller, contends in her petition for administrative 
      review that there was a total of $1,108.00 In "unnecessary expenses" 
      incurred by her which should be considered, including $650.00 for a new 
      refrigerator and gas range installed at the beginning of Mr. Flink's 
      tenancy.  In support of this claim, the prior owner submits a letter to 
      the tenant, dated December 27, 1984, which requests payment for several 
      of these items, including "added rent" of $63.00 representing the 
      "reasonable costs" incurred by the owner in twice repairing the faucet 
      in tenant's kitchen sink due to the tenant's unlawful use of a washing 
      machine; $35.00 for repair of the wood frame of the apartment's entrance 
      door, which the letter states was damages by the tenant; and $200.00, to 
      be paid at $5.00 per month, for new storm windows.  The petition also 
      includes a copy of a signed agreement between the parties, dated July 
      17, 1984, which had been submitted below as a separate attachment to the 
      tenant's only written lease, also dated July 17, 1984, and which stated 
      in part, as follows: that the tenant owes the sum of $185.40 in security 
      as of the date of the agreement; that the tenant has paid all back rent 
      from April to June, 1984; that the tenant will retain one month's rent 
      "pending completion" of certain apartment repairs by the owner; and that 
      the tenant will bear the cost of storm windows to be installed by the 
      owner.  The petition also includes a statement from the tenant dated 
      October 14, 1984 in which the tenant agreed to pay half the cost of 6 
      used storm windows at $5.00 per month.

          BK210010RO; HK210009RP

      In her answer, the tenant denies the prior owner's allegations that 
      repairs were needed because of the tenant's conduct, as well as the 
      claims for the new stove and refrigerator, which the tenant states were 
      already used when she assumed occupancy.  The tenant also states that 
      the full amount of security deposit was paid.

      The Commissioner is of the opinion that these petitions should be 
      granted in part.

      Section 42A of the former Rent Stabilization Code requires that an owner 
      retain complete records for each stabilized apartment in effect from 
      June 30, 1974 (or the date the apartment became subject to rent 
      stabilization, if later) and to produce such records to the DHCR upon 

      Section 26-516 of the Rent Stabilization Law, effective April 1, 1984, 
      limited an owner's obligation to provide rent records by providing that 
      an owner may not be required to maintain or to produce rent records for 
      more than four (4) years prior to the most recent registration, and 
      concomitantly, established a four year limitation on the calculation of 
      rent overcharges.

      It has been the DHCR's policy that overcharge complaints filed prior to 
      April 1, 1984, are to be processed pursuant to the Law or Code in effect 
      on March 31, 1984. (see Section 2526.1 (a) (4) of the current Rent 
      Stabilization Code.)  The DHCR has therefore applied Section 42A of the 
      former Code to overcharge complaints filed prior to April 1, 1984, 
      requiring complete rent records in these cases.  In following this 
      policy, the DHCR has sought to be consistent with the legislative intent 
      of the Omnibus Housing Act (Chapter 403, Laws of 1983), as implemented 
      by the New York City Conciliation and Appeals Board (CAB) the 
      predecessor agency to the DHCR, to determine rent overcharge complaints 
      filed with the CAB prior to April 1, 1984, by applying the law in effect 
      at the time such complaints were filed so as not to deprive such tenants 
      of their rights to have the lawful stabilized rent determined from the 
      June 30, 1974 base date and so as not to deprive tenants whose 
      overcharge claims accrued more than four years prior to April 1, 1984 of 
      the right to recover such overcharges.  In such cases, if the owner 
      failed to produce the required rent records, the lawful stabilized rent 
      would be determined pursuant to the default procedure approved by the 
      Court of Appeals in 61 Jane Street Associates v. CAB, 65 N.Y.2d 898, 493 
      N.Y. S. 2d 455 (1985).

      However, it has recently been held in the case of J.R.D. Mgmt. v. 
      Eimicke, 148 A.D.2d 610. 539 N.Y.S. 2d 667 (App. Div. 2d Dept., 1989). 
      motion for leave to reargue or for leave to appeal to the Court of 
      Appeals denied ( App. Div. 2d Dept., N.Y.L.J., June 28, 1989. p.25, 
      col.1), motion for leave to appeal to the Court of Appeals denied (Court 
      of Appeals, N.Y.L.J., Nov. 24, 1989, p.24, col.4)., motion for leave to 
      reargue denied (Court of Appeals, N.Y.L.J., Feb. 15, 1990, p.25, col.1), 
      that the Law in effect at the time of the determination of the 

          BK210010RO; HK210009RP

      administrative complaint rather than the Law in effect at the time of 
      the filing of the complaint must be applied and that the DHCR could not 
      require an owner to produce more than four years of rent records.

      Since the issuance of the decision in JRD, the Appellate Division, First 
      Department, in the case of Lavanant v. DHCR, 148 A.D.2d 185, 544 
      N.Y.S.2d 331 (App. Div. 1st Dept. 1989), has issued a decision in direct 
      conflict with the holding in JRD.  The Lavanant court expressly rejected 
      the JRD ruling finding that the DHCR may properly require an owner to 
      submit complete rent records, rather than records for just four years, 
      and that such requirement is both rational and supported by the Law and 
      legislative history of the Omnibus Housing Act.

      Since in the instant case the subject dwelling unit is located in the 
      Second Department, the DHCR is constrained to follow the JRD decision in 
      determining the tenant's overcharge complaint, limiting the requirement 
      for rent records to April 1, 1980.

      An examination of the records in this case establishes that the 
      complainant first took occupancy of the subject apartment in September, 
      1978 at a rent of $170.00 per month, and that the amount of rent charged 
      since that date is not a subject of dispute.  Therefore, the rental 
      history is sufficient for a determination of the lawful rent since the 
      April 1, 1980 base date, and the finding of default is hereby revoked.  

      With regard to the current owner's contention that the tenant failed to 
      pay rent for the months of January and February of 1986, the 
      Commissioner finds no reason to change the earlier finding that the 
      claim is without merit, since the tenant has submitted rental receipts 
      proving payment for those two months.

      As for the security deposit, there is again no need to modify the 
      earlier opinion.  The tenant's rent receipts indicate payment of 
      security deposit, and the owner has submitted no proof to document his 
      claim that the security was returned.  Accordingly, the Commissioner 
      reaffirms the earlier rejection of this claim.

      With regard to the former owner's claim for the cost of improvements to 
      the subject apartment, the Commissioner finds that the former owner 
      failed to raise such claims during the proceeding before the 
      Administrator and pursuant to Section 2529.6 of the Code, which limits 
      the scope of review on administrative appeal to issues raised before the 
      Administrator, the former owner may not raise such claims for the first 
      time on administrative appeal.  However, it is noted that the prior 
      owner's claims for a rent increase based on the costs of a new 
      refrigerator and stove, as well as the claimed rent increase for storm 
      windows, are not supported by a contract, invoice, cancelled check or 
      other proof of payment, in accordance with the requirements of Policy 
      Statement 90-10.  In addition, the tenant's statement of October 14, 
      1984 indicates that the storm windows were used.  The remaining claims 
      of the former owner all involve various repairs for such items and a 
      rent increase for repairs is prohibited under the Rent Stabilization 

          BK210010RO; HK210009RP

      Code.  Therefore no rent increase for any of the items claimed by the 
      prior owner would be warranted.

      The record also establishes that the Administrator mistakenly extended 
      the period of overcharge in the order to September 1986 even though the 
      tenant vacated in March, 1986.  Finally, a review of DHCR records 
      indicates that the 1984 initial registration of the subject apartment 
      was defective in that it listed an initial rent of $235.40 , whereas the 
      actual April 1, 1984 rent was $220.00, and that the 1985 registration 
      was defective in that it listed a different tenant at a different rent 
      for the subject apartment.  As a result, the rent is frozen at the April 
      1, 1984 legal regulated rent until the owner files the proper 
      registrations, when the rent will be adjusted prospectively.

      A recalculation of the lawful stabilized rent results in a total 
      overcharge of $701.12, including interest, as indicated in the rent 
      calculation chart affixed hereto and made a part hereof.

      Section 2526.1(f) of the Rent Stabilization Code provides in pertinent 
      part that for overcharges collected prior to April 1, 1984, an owner 
      will be held responsible only for his or her portion of the overcharge, 
      in the absence of collusion or any relationship between such owner and 
      any prior owners, and that for overcharge complaints filed or 
      overcharges collected on or after April 1, 1984, a current owner shall 
      be responsible for all overcharge penalties, including penalties 
      collected by any prior owner.

      In the instant case, examination of the records discloses no evidence of 
      collusion or of any relationship between the present owner and the prior 
      owner.  Pursuant to Section 2526.1 (f): the prior owner is individually 
      responsible for overcharges collected from September 1, 1978 until March 
      31, 1984, that is, $167.14; the prior owner and the current owner are 
      jointly and severally liable for overcharges collected from April 1, 
      1984 through June 30, 1985 (inclusive of interest), that is, $301.86; 
      and the current owner is individually responsible for overcharges 
      collected from July 1, 1985 (the date of transfer of ownership) to 
      February 28, 1986 (inclusive of interest and excess security), that is, 

      The owner is directed to reflect the findings and determinations made in 
      this order on all future registration statements, including those for 
      the current year if not already filed, citing this order as the basis 
      for the change.  Registration statements already on file, however, 
      should not be amended to reflect the findings and determinations made in 
      this order.  The owner is further directed to adjust subsequent rents to 
      an amount no greater than that determined by this order plus any lawful 

      The Commissioner has determined in this Order and Opinion that the 
      owners collected overcharges of $701.12.  This Order may, upon 
      expiration of the period for seeking review of this Order and Opinion 

          BK210010RO; HK210009RP

      pursuant to Article Seventy-eight of the Civil Practice Law and Rules, 
      be filed and enforced as a judgment.  Upon such filing, the County Clerk 
      may add to the overcharge, interest at the rate payable on a judgment 
      pursuant to Section 5004 of the Civil Practice Law and Rules from the 
      issuance date of the Rent Administrator's Order to the issuance date of 
      the Commissioner's Order.

      Since the record indicates that the tenant has vacated the subject 
      apartment, a copy of this order and opinion is being sent to the tenant 
      currently in occupancy.

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

      ORDERED, that these petitions for administrative review be, and the same 
      hereby are, granted in part, and that the order of the Rent 
      Administrator be, and the same hereby is, modified in accordance with 
      this order and opinion.  


                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner


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