Docket No. BL 410238-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. BL 410238-RO      
                                                
             503 REALTY ASSOCIATES,              DISTRICT RENT ADMINISTRATOR'S
                                                 DOCKET NO. 15774        

                                                 TENANT:  Deborah Lawrence
                                PETITIONER     
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            ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW

          On December 28, 1987 the above-named owner filed  a  petition  for
          administrative review of an order issued on November 23,  1987  by
          a   District   Rent   Administrator   concerning    the    housing
          accommodation known as Apartment 1-C, 503 East  73rd  Street,  New
          York, New York, wherein the owner was directed to  roll  back  the
          rent and to refund  overcharges  of  $2,901.35,  including  excess
          security and interest for overcharges  collected  after  April  1,
          1984.

          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 petition for review.

          This proceeding was  commenced  by  the  filing  of  the  tenant's
          objection to the 1984 apartment registration alleging  that  there
          was a rent overcharge.

          The tenant took occupancy pursuant to a one-year lease  commencing
          on June 1, 1984 and expiring on May 31, 1985 at a monthly rent  of
          $595.00

          On April 30, 1985 the Administrator mailed to the owner a copy  of
          the tenant's objection, and a notice directing the owner to submit 
          its answer, with all relevant documentation  to  substantiate  its
          answer.

          On June 6, 1985 the owner submitted its answer  stating  that  the
          subject tenant had vacated the subject apartment owing two months' 
          rent,  and  requesting  that  the  tenant's  complaint  should  be
          dismissed.

          On July 12, 1985 the subject tenant submitted a  response  to  the
          owner's answer which alleged that it is not true that she  vacated
          the subject apartment owing two months' rent and  that  the  owner
          refused to provide a rental history of the subject apartment.
          On April 8, 1986 the Division of  Housing  and  Community  Renewal
          (D.H.C.R.) mailed to the owner  a  "Notice  Requesting  Additional
          Information," whereby the owner was  requested  to  submit  leases
          from April 1, 1980 to the last [sic.] lease period of the tenant's 
          occupancy.  The notice warned the owner  that  failure  to  comply






          Docket No. BL 410238-RO

          with this request could result in the issuance of an  order  based
          on the evidence then in the file.  The owner failed to respond.

          On March 2, 1987 D.H.C.R. mailed to the  subject  owner  a  "Final
          Notice of Pending Default" stating  that  if  the  owner  did  not
          submit leases in effect from April 1, 1980 to the date the subject 
          tenant took occupancy, within twenty days of the mailing  of  that
          notice, the Administrator  would  determine  the  legal  regulated
          rent pursuant to the D.H.C.R.'s default procedure.

          The owner did not submit any leases to the Rent Administrator,  as
          requested.

          In the order under review herein, the Administrator found that the 
          owner had failed to submit a complete rental  history,  determined
          that the legal regulated rent would be established  by  using  the
          D.H.C.R.'s default procedure,  established  the  subject  tenant's
          legal regulated rent at $380.25  per  month,  and  computed  total
          overcharges in the amount of $2,901.35, including excess  security
          and  accrued  interest  from  April  1,  1984.   Furthermore,  the
          Administrator  dismissed  the  tenant's  objection   to   services
          registration, as  the  subject  tenant  had  vacated  the  subject
          apartment.

          In its petition for review, the owner asserts that  prior  to  the
          subject  tenant's  occupancy  approximately  $10,000.00  worth  of
          renovations were done to the subject  apartment,  and,  the  owner
          alleges, it could have raised the complainant's rent  by  1/40  of
          that amount ($250.00), and therefore,  the  owner  maintains,  the
          tenant was being charged a rent that was below the legal regulated 
          rent.  The owner further states that the two months' rent that the 
          tenant  owes  the  owner  should  have  been  offset  against  the
          overcharge   found   by   the   Administrator,   and   that    the
          Administrator's order should be revoked in  order  to  permit  the
          tenant to submit the issues raised in this proceeding to  a  judge
          for a determination.

          After careful consideration, the Commissioner is  of  the  opinion
          that the owner's petition should be denied.

          The  Commissioner  notes  that   after   the   issuance   of   the
          Administrator's order the  owner's  managing  agent  submitted  an
          answer to the tenant's  complaint,  filed  on  February  16,  1988
          (almost  three   months   after   the   issuance   date   of   the
          Administrator's order and almost two months after the petition for 
          review was filed), stating that it expended $20,000.00 for total 






          Docket No. BL 410238-RO

          renovations of the subject  apartment;  that  the  subject  tenant
          freely entered into the lease agreement, at the agreed  upon  rent
          of $595.00; that the tenant vacated the  subject  apartment  owing
          two months rent, and that the tenant should not  be  rewarded  for
          moving out owing rent to the  owner.   To  the  answer  the  owner
          attached the prior tenant's lease commencing on December 1, 1982.

          As the owner did not submit this answer to the Administrator prior 
          to the issuance of the  Administrator's  order,  the  Commissioner
          finds that this  answer  was  submitted  untimely,  and  that  the
          Administrator was  correct  in  establishing  the  tenant's  legal
          regulated  rent  by  using  D.H.C.R.'s  default  procedure.    The
          Commissioner notes that  even  if  the  owner  had  submitted  the
          aforementioned answer timely the Administrator  still  would  have
          been correct in finding the owner in default,  because  the  owner
          did not submit leases from April 1, 1980, as previously  requested
          by the Administrator.

          As to the owner's request that  "a  judge"  should  determine  the
          issues raised in this proceeding, the Commissioner points out that 
          the D.H.C.R. has authority to determine  these  issues  under  the
          Rent Stabilization Law and Code.

          As the owner raises  the  issue  of  renovations  of  the  subject
          apartment for the first time upon administrative review and in its 
          "answer" submitted almost three months after  the  Administrator's
          order was issued, and does not explain why this  issue  could  not
          reasonably have been raised in the proceeding before the  District
          Rent Administrator, it is outside the scope of the  Commissioner's
          review in this proceeding.  The Commissioner notes  that  even  if
          this issue were before the Commissioner the owner still would  not
          be entitled to  increase  the  legal  regulated  rent  by  $250.00
          (1/40th of $10,000.00), as the owner did not submit  any  evidence
          of having done the renovations, of their costs, or of payment.

          The Commissioner points out that in the  untimely  filed  "answer"
          the owner's agent asserted that the  alleged  renovations  to  the
          subject apartment cost $20,000.00, but in its petition  the  owner
          asserts that the alleged renovations cost $10,000.00.  In view  of
          these sharply conflicting statements, the owner's  credibility  in
          this proceeding is greatly diminished.  It is also  noted  by  the
          Commissioner that the tenant denies the owner's assertion of owing 
          two months' rent to  the  owner.   Accordingly,  the  Commissioner
          finds, based upon the preponderance  of  the  evidence,  that  the
          tenant does not owe the owner  two  months'  back  rent,  and  the
          Commissioner further finds that there should be no offset  against
          the total overcharge found by the Administrator.

          The owner is cautioned that rents for the period from June 1, 1985 
          and thereafter as established by the Rent Administrator's order of 
          November 23, 1987 were not stayed by the filing  of  the  petition
          for administrative review and remain in full force and effect.  






          Docket No. BL 410238-RO

          All future rents shall be based upon the last lease period in  the
          Rent  Administrator's  order,  commencing  on  June  1,  1984  and
          expiring on May 31, 1985, of $380.25  per  month.   The  owner  is
          further cautioned that a copy of this order is being sent  to  the
          current tenant of the subject apartment, and that any  demand  for
          and collection of an amount in excess of  the  lawful  amount  may
          give rise to a new overcharge complaint, in which  treble  damages
          may be awarded if warranted.

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

          ORDERED, that this petition be, and the same  hereby  is,  denied,
          and that the order of the Rent  Administrator  be,  and  the  same
          hereby is, affirmed; and it is

          FURTHER ORDERED, that the owner, 503 East 73rd Street Company  and
          503 Realty Associates, and its agent,  Horatio  Management  Corp.,
          shall  refund  to  the  tenant  all  amounts  not   yet   refunded
          representing overcharges, penalties, and excess security  deposit;
          and it is

          FURTHER ORDERED, that if the owner or its agents has  refunded  no
          such amounts  upon  the  expiration  of  the  period  for  seeking
          judicial review of this order pursuant to Article 78 of the  Civil
          Practice Law  and  Rules,  the  tenant  may  file  and  enforce  a
          certified copy of this order as  a  judgment  for  the  amount  of
          $2,901.35 as against 503 East  73rd  Street  Company,  503  Realty
          Associates, and Horatio Management Corp., jointly and severally.

          ISSUED: 




                                                                     
                                       ELLIOT SANDER
                                       Deputy Commissioner
    

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