BK210010RO; HK210009RP
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. BK210010RO
HK210009RP
Hilda Geller, prior owner, : DISTRICT RENT OFFICE
and DOCKET NO. K3103315R
Abraham Herzberg, owner,
TENANT: Mildred Flink
PETITIONER :
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ORDER AND OPINION ON REMIT GRANTING PETITIONS FOR ADMINISTRATIVE
REVIEW IN PART
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
warranted.
This proceeding was commenced on March 25, 1984 by the tenant's filing
of a rent overcharge complaint wherein she contended in substance that
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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.
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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.
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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
demand.
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
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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
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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,
$232.12.
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
increases.
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
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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.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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