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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.BA210017RO
BA210108RO
: DRO DOCKET NO.K3106071R
MELVIN ZUCKERMAN TENANT: CARMEN SMITH
PETITIONER :
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW IN
PART
On January 22, 1987, the above-named petitioner-owner filed a
Petition for Administrative Review against an order issued on
December 19, 1986, by the Rent Administrator, 10 Columbus Circle,
New York, New York, concerning the housing accommodations known as
222 Lenox Road, Brooklyn, New York, Apartment No. 3R, wherein the
Rent Administrator determined that the owner had overcharged the
tenant. This petition was given duplicate docket numbers.
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.
The Commissioner has reviewed all of the evidence in the record
and has carefully considered that portion of the record relevant to
the issue raised by the administrative appeal.
This proceeding was originally commenced by the filing in
March, 1984 by the tenant in which the tenant stated that she first
moved to the subject apartment in May, 1983 at a rental of $570.00
per month.
In answer to the tenant's complaint, the owner stated in
substance that he is a federally appointed receiver appointed during
the pendency of a federal foreclosure action against the subject
premises and has not been able to obtain a full rental history for
the subject apartment. The owner however did submit a rental
history for the subject apartment dating back to 1976 and evidence
showing that he had been appointed receiver as of July 1, 1983.
In Order Number CDR 28,529, the Rent Administrator determined
that due to the owner's failure to submit a complete rental history,
the tenant had been overcharged in the amount of $12,466.66
including interests on the overcharge occurring on and after April
1, 1984 and directed the owner herein to refund such overcharge to
the tenant as well as to reduce the rent except that the prior owner
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was ordered to refund the overcharge it had collected from the
tenant out of this total amount.
In this petition, the owner alleges in substance that it could
not obtain complete rent records from the foreclosed owner of
record; that he is now preparing a request for preemption of the
rent stabilized rents with the Department of Housing and Urban
Development (HUD) since the U.S. Government holds the mortgage and
the rents are inadequate to maintain and operate the subject
premises; and that the rent of the subject apartment should be
recomputed in accordance with any schedule of fair market rents to
be proposed by HUD.
The record shows that a new owner has now purchased the subject
premises.
In answer to the owner's petition, the tenant stated in
substance that the owner's petition should be denied.
The Commissioner is of the opinion that this petition 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
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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 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.
In this case, the owner has submitted a complete rental history
from April 1, 1980 in accordance with JRD. An examination of the
rental history from April 1, 1980, discloses that a rent overcharge
did occur. The lawful stabilization rents and amount of rent
overcharge including interest on overcharges occurring on and after
April 1, 1984 are set forth on the amended rent calculation chart
attached hereto and made a part hereof. Further, contrary to the
owner's contention on appeal, there is no evidence that the rent of
the subject apartment was federally preempted and reset by HUD.
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
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increases.
If the owner has already complied with the Rent Administrator's
order and there are arrears due to the owner as a result of the
instant determination, the tenant shall be permitted to pay off the
arrears in twenty four equal monthly installments. Should the
tenant vacate after the issuance of this order or have already
vacated, said arrears shall be payable immediately.
The Commissioner has determined in this Order and Opinion that
the owner herein Melvin Zuckerman collected overcharges of $5763.18.
This Order may, upon expiration of the period for seeking review of
this Order and Opinion pursuant to Article Seventy-eight of the
Civil Practice Law and Rules, be filed and enforced as a judgment
against such owner. Where the tenant files this Order as a
judgment, 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. The Commissioner has further determined that the prior owner
Ronox Builders collected overcharges of $227.08. The tenant may
file an action in a court of competent jurisdiction to recover this
sum against the prior owner Ronox Builders.
THEREFORE, in accordance with the Appellate Division ruling in
JRD, it is
ORDERED, that this petition for administrative review be, and
the same hereby is, 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. The amount of the rent overcharge
through December 30, 1986 owed by the owner herein is $5763.18.
.
ISSUED
JOSEPH A. D'AGOSTA
Deputy Commissioner
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