ADM. REVIEW DOCKET NO. BK 410150 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
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IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: BK 410150 RO
:
DRO DOCKET NO.: CDR 31,662
GRAMERCY CONCOURSE CO. - OWNER
Tenants - Beverly Wilson &
Donald Privett
PETITIONER :
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ORDER AND OPINION REMANDING PROCEEDING FOR FURTHER PROCESSING
On November 30, 1987, the above-named owner filed a Petition
for Administrative Review against an order issued on October 27,
1987 by the Rent Administrator, 10 Columbus Circle, New York, New
York concerning the housing accommodation known as 102 East 22nd
Street, apartment 6H, New York, New York wherein the
Administrator directed the owner to refund $18,987.94 inclusive
of excess security and interest on the overcharge occurring on or
after April 1, 1984.
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, any reference in this order and opinion to
Sections of the Rent Stabilization Code is to the Code in effect
on April 30, 1987, and this proceeding is being determined in
accordance therewith.
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 in the administrative appeal.
The tenants commenced this proceeding on February 14, 1984
by filing a complaint of rent overcharge with the former New
York City Conciliation and Appeals Board, a predecessor agency to
the DHCR.
ADM. REVIEW DOCKET NO. BK 410150 RO
On October 24, 1984, a copy of the complaint along with a
demand for a complete rental history of the subject apartment
from its base date was served on the owner.
In response, the owner stated that September 15, 1978 was
the base date for the subject apartment and submitted copies of
leases from September 15, 1978 through January 31, 1986.
On January 25, 1986 and on May 6, 1986, the DHCR notified
the owner that documentation, consisting of 1) a copy of the DC 2
notice served on the first stabilized tenant; or 2) a copy of the
landlord's report of statutory decontrol (R-42 form); or 3) a
copy of the rent ledger for the period of September 15, 1978
showing the date of decontrol, was required to substantiate the
asserted base date. The owner was also informed that failure to
comply with the requirement would be considered a default which
would result in the Administrative establishment of the legal
stabilization rent in accord with approved default procedures
pursuant to Code Section 42A.
In reply, the owner asserted that it had requested access to
the rent control office records in an effort to obtain a copy of
the R-42, allegedly filed with that office, but the record was
not yet available. Therefore, the owner requested an extension
of time until such time as it could get a copy of the form. The
owner included with its response a typewritten letter dated
August 3, 1978 allegedly from the former rent controlled tenant.
The Administrator granted several time extensions to enable
the owner to provide the complete rental history required. On
October 27, 1987, the Administrator issued the order here under
review, establishing the lawful stabilized rent at $575.19 as of
January 31, 1986 and directing the owner to refund overcharges of
$18,987.94 inclusive of excess security and interest on the
overcharge occurring on or after April 1, 1984.
In its appeal, the owner contends that it has been unable to
obtain the required records because of administrative
difficulties created by having employed four different management
companies to operate the subject property over a ten year period.
The owner also asserts that given its belief that an R-42 had
been filed, it had made two requests to the DHCR for a copy but
the agency, failing its responsibility, had not responded to the
requests.
In reply, the tenant contends that the owner neglected to
meet its responsibility under the law to provide a full rental
history of the subject apartment but instead has attempted to
shift its responsibility to the DHCR. The tenant further
contends that the purported four different management companies
were only one company that had operated under four different
names. Finally, the tenant questions the credibility of an owner
who has tried to arrange a settlement before a final decision by
ADM. REVIEW DOCKET NO. BK 410150 RO
the DHCR was rendered.
The owner filed a supplemental petition in March 1988,
contending that the owner had been diligent in attempting to
obtain a copy of the R-42 form and that despite two applications
by the owner for access to records, the owner has been denied
access.
In a supplemental petition filed on June 30, 1988, the owner
reiterates that it had made good faith efforts to obtain the R-42
from the DHCR and the onus is on the agency to produce the
document. The owner also asserts that the current managing agent
made all reasonable efforts to obtain the rental records which
could have been "lost in the shuffle" of managing a larger volume
of apartments and that the owner should not be penalized so
severely for one administrative deficiency. The remaining issues
raised by the owner are based upon the current Code, effective
May 1, 1987: 1) the owner is not required to maintain records for
more than four years; and 2) since the tenant's objection to the
registration was dismissed as untimely, prior to the issuance of
the order at issue, the legal regulated rent was established by
the registration and the Administrator was collaterally estopped
from rendering a decision on the issue. The owner concludes its
supplement by taking notice that the tenant's assertion regarding
offers of settlement were inappropriately raised and legally
incorrect.
The tenant did not respond to the supplemental petitions.
After careful consideration, the Commissioner is of the
opinion that this proceeding should be remanded for further
processing.
Section 42A of the former Code requires an owner to maintain
rental records from the base date of the housing accommodation.
A rent is lawful if it does not exceed the lawful rent on the
base date, i.e. the Initial Legal Regulated Rent, plus all other
lawful increases. Since the putative instant base date was
subsequent to June 30, 1974, it was incumbent upon the owner to
establish the base date by submitting appropriate documentation
as was related in the notices sent to the owner: a DC-2 notice,
an R-42 form, or a rent ledger from the given period. Although
given ample opportunity to do so, the owner failed to submit any
one of those documents even in this appeal. Instead, the owner
has attempted to shift its responsibility to the DHCR without
offering a scintilla of proof that the alleged filing actually
occurred. A careful search of the agency's records reveals no
evidence, other than the owner's assertions, that an R-42 was
filed. The Rent Stabilization Law gives the owner the
responsibility of calculating lawful rent and of maintaining
necessary records. Accordingly, the Commissioner finds that the
burden of producing the appropriate documentation remained with
the owner.
The Emergency Tenant Protection Act gave certain tenants of
ADM. REVIEW DOCKET NO. BK 410150 RO
vacancy decontrolled apartments the right to challenge their
initial rents. A tenant whose apartment was subject to rent
control on June 30, 1974; and became subject to the Rent
Stabilization Law as a result of a vacancy occurring after June
30, 1974 has the right to challenge his initial legal regulated
rent. The owner must serve him with notice of initial legal
regulated rent (DC-2 notice). The tenant entitled to receive the
notice is the first tenant to take occupancy after the vacancy
decontrol. If that tenant moves out before being served with a
DC-2 notice, the tenant next in occupancy is entitled to receive
it. The appeal must be filed, if at all, within ninety (90) days
of receipt of the DC-2 notice.
The Commissioner notes that the owner submitted a complete
lease history from the asserted base date but was in default for
failing to substantiate the base date alleged. Review of rent
control records reveals that the last recorded rent control rent
for the subject apartment was the 1978 MBR (maximum base rent) of
$381.41. The rent in the first lease submitted by the owner is
$600.00. There is no evidence of service of a DC-2 notice. The
owner failed to respond affirmatively to two requests for a copy
of the DC-2 notice. Accordingly, the Commissioner hereby
determines that the tenant's overcharge complaint should be
processed as a fair market rent appeal.
With respect to the owner's contention regarding the
application of the current Code to the issues at bar, the
Commissioner notes that this proceeding, having been initiated
prior to April 1, 1984, is governed by the former Code pursuant
to Sections 2526.1(a)(4) and 2521.1(d) of the current Code. See
Lavanant v. DHCR, 148 A.D2d 185, 544N.Y.S.2d 331 (App. Div. 1st
Dept. 1989), applicable to dwellings, such as the subject
apartment, located in the First Judicial Department.
Accordingly, the owner was properly required to submit rental
records dating from the base date. The rent registered in 1984
pursuant to the registration requirements of the current code is
not determinative of the legality of the rent at issue in a
complaint which precedes it.
Finally, the Commissioner's determination is made without
consideration of the settlement offers alleged by the tenant.
THEREFORE, in accordance with the provisions of the Rent
Stabilization Law and Code, it is
ORDERED, that this proceeding be remanded for further
processing in accordance with this order and opinion. It is
FURTHER ORDERED, that the prospective rent established by
the Administrator's order remain in effect but that the
retroactive rent and refund ordered by the Administrator be
stayed until a new determination be rendered.
ISSUED:
ADM. REVIEW DOCKET NO. BK 410150 RO
JOSEPH A. D'AGOSTA
Deputy Commissioner
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