DOCKET NO.: BK 410146 RO
                                 STATE OF NEW YORK 
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                              JAMAICA, NEW YORK  11433

          APPEAL OF                               DOCKET NO.: BK 410146.RO

                    Arnold & Anne Gumowitz        DRO DOCKET NO.:
                                                  CDR 31,574
                                                  TENANT: Janet Fletcher


          On November 9, 1987, the above-named petitioner filed a Petition 
          for Administrative Review against an order issued on October 9, 
          1987 by the Rent Administrator, 10 Columbus Circle, New York, New 
          York concerning the housing accommodation known as 10 Sheridan 
          Square, New York, New York, apartment 11A wherein the Administrator 
          determined that an overcharge had occurred and directed the owner 
          to refund $10,346.84 inclusive of excess security and interest on 
          the overcharge occurring on or after April 1, 1984.

          The Commissioner has reviewed all of the evidence of record and has 
          carefully considered that portion of the record relevant to the 
          issues raised in the administrative appeal.

          This proceeding was commenced on March 30, 1984 when the tenant 
          filed an overcharge complaint with the former New York City 
          Conciliation and Appeals Board, a predecessor agency to the DHCR.  
          The tenant stated she had taken occupancy of the subject apartment 
          on August 1, 1977 pursuant to a two year lease expiring on July 31, 
          1979 at a monthly rent of $450.00.

          A copy of the complaint along with answer forms was served on the 
          prior and current owners.

          In response, the current owner submitted a rental history from 
          August 1, 1977, the alleged base date, a copy of a Notice of 
          Maximum Collectible Rent (form N-26), and a lease history for the 
          period August 1, 1977 through July 31, 1987.  The owner did not 
          submit substantiating documentation of the base rent date.

          Pursuant to a Final Notice of Pending Default, the owner was 
          advised that its failure to substantiate the base rent date would 
          result in the determination of the legal stabilized rent in accord 
          with established default procedures.

          DOCKET NO.: BK 410146 RO

          In the order issued on October 9, 1987, the Administrator 
          determined that the owner had defaulted in providing a full rental 
          history, established the lawful stabilized rent at $576.09 as of 
          August 1, 1985 through July 31, 1987, and directed the owner to 
          refund overcharges of $10,346.84 inclusive of excess security and 
          interest on the overcharge occurring or after April 1, 1984.

          In the appeal, the owner requests that the order be reversed.  The 
          owner contends that the Administrator erred 1) in applying 
          Guidelines Order Number 9 to establish the first stabilized rent.  
          The Administrator should have applied the Special Guidelines rate 
          of 20% to the greater of the MCR (Maximum Collectible Rent) or the 
          MBR (Maximum Base Rent) to establish the base rent; 2) in 
          defaulting the owner because the owner had timely responded and 
          submitted required data which clearly substantiated the legality of 
          the rent being collected; and 3) in permitting the tenant to file 
          two separate overcharge complaints.

          Although given the opportunity to do so, the tenant did not reply 
          to the petition.

          The Commissioner is of the opinion that this petition should be 

          The evidence of record indicates that the tenant herein has 
          occupied the subject apartment since August 1, 1977 and may be the 
          first stabilized tenant.  The owner has submitted some evidence,  
          i.e. form N-26, the notice of Maximum Collectible Rent: Effective 
          January 1, 1977, of the subject apartment's rent and rent 
          controlled status preceding the tenant's occupancy.  However, the 
          owner did not submit proof of having served or filed a landlord's 
          Report of Statutory Decontrol (R-42) or of having served a DC-2 
          notice, either of which would have notified the tenant of the prior 
          rent controlled status of the apartment and of her right to 
          challenge the rent being charged.  Accordingly, the overcharge 
          complaint correctly should have been processed as a fair market 
          rent appeal, thereby affording the tenant the opportunity to 
          challenge the fair market rent and the owner the opportunity to 
          prove the legality of the rent as being in compliance with fair 
          market directives.

          The fair market rent is determined on the basis of two criteria: 1) 
          a special guideline order promulgated by the Rent Guideline Board, 
          and 2) rents generally prevailing in the same area for 
          substantially similar housing accommodations.  The fair market 
          rent of the subject apartment is governed by Special Fair Market 
          Rent Guidelines Order Number 9 which permitted a 20% increase above 
          1976 Maximum Rents for apartments vacancy decontrolled between July 
          1, 1977 and June 30, 1978.  The evidence of record reveals that the 

          DOCKET NO.: BK 410146 RO

          1976 MBR was $417.76.  An increase of 20% equals a total of 
          $501.31.  Since the initial rent charged is less than could have 
          been charged with the use of only one criterion, it is unnecessary 
          to consider the comparability test to determine the legal rent.  
          The Commissioner notes that where the rent charged is less than the 
          amount that could have been charged, the rent charged is the legal 
          stabilized rent.  Therefore, the commissioner finds that the 
          initial legal stabilization rent for the period August 1, 1977 
          through July 31, 1979 should be $450.00 and that there was no 

          The Commissioner notes that the owner suffered no adverse effect by 
          the filing of two complaints and that the overcharge complaint 
          filed in conjunction with the registration objection was dismissed.

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

          ORDERED, that the legal stabilization rent as of August 1, 1977 
          through July 31, 1979 be established, and hereby is, at $450.00; 
          and, it is

          FURTHER ORDERED, that this petition be, and the same hereby is, 
          granted, and the Rent Administrator's order be revoked.


                                                  JOSEPH A. D'AGOSTA
                                                  Deputy Commissioner


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