OFFICE OF RENT ADMINISTRATION
                                    GERTZ PLAZA
                              92-31 UNION HALL STREET
                              JAMAICA, NEW YORK 11433

     APPEAL OF                              DOCKET NO.: BD 410325-RO
                                            DRO DOCKET NO.: ZL 000740-R
                           PETITIONER    : 


     On April 2, 1987, the above named petitioner-prime tenant timely refiled a 
     Petition for Administrative Review against an order issued on January  14,
     1987, by  the  District  Rent  Administrator,  92-31  Union  Hall  Street,
     Jamaica, New York concerning housing accommodations known as Apartment PH 
     NC, 135 Central Park West, New York, New York wherein  the  District  Rent
     Administrator determined that the prime tenant h d  overcharged  the  sub-

     The issue in this appeal is  whether  the  District  Rent  Administrator's
     order was warranted.

     The applicable sections of the law are Sections 10B,  21  and  63  of  the
     former  Rent Stabilization Code and Sections  2526.1  and  2525.6  of  the
     current Rent Stabilization Code.

     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 commenced on  August  29,  1984  by  the  sub-tenant's
     filing of a rent overcharge complaint wherein the sub-tenant contended  in
     substance that he rented the subject apartment from the prime  tenant  for
     the period from November 30, 1981 through  December  31,  1981,  that  the
     prime tenant charged him a monthly  rent  of  $7,000.00  plus  a  security
     deposit of $14,000.00, that he initiated a court action against the  prime
     tenant in the New York State Supreme Court, New York County, but that  the
     court action had been stayed pending  a  decision  from  the  Division  of
     Housing and Community Renewal (DHCR) as to the amount of the rent increase 
     above the prime tenant's rent which could have been charged the sub-tenant 
     based on the furnishings in the subject apartment  and  in  light  of  the
     Court of Appeals decision In re Kranz v. Conciliation and  Appeals  Board,
     57 NY2d 915 (1982).

     In Docket Number ZL 000740-R issued January 14, 1987,  the  District  Rent
     Administrator determined  that  the  lawful  stabilization  rent  for  the
     subtenancy was $1,043.49, that the prime tenant was entitled to a 10% rent 


          DOCKET NUMBER: BD 410325-RO
     increase for the  furnishings  in  the  subject  apartment  and  that  the
     subtenant had been overcharged for  the  period  from  November  30,  1981
     through December 31, 1981 which included $12,956.51 in excess security.

     In this petition, the prime tenant contends in substance that the District 
     Rent Administrator incorrectly limited the prime tenant to a 10%  increase
     for the furnishings in the subject apartment by failing  to  consider  the
     value and quality of the furnishings which included bone  china,  original
     18th century silk screens, 18th century British chests, marble  tables,  a
     19th century French fireplace screen and silver candy dishes, that in 1981 
     the Rent Administrator had the discretion to  determine  the  fair  rental
     value of the furnishings, and that strict reliance on the  "10%  Rule"  to
     determine the value of the furnishings was arbitrary and  capricious.   In
     support  of  these  contentions,  the  prime  tenant  submits  copies   of
     photographs allegedly depicting the furnishings in the subject apartment.

     In response to the prime tenant's petition,  the  sub-tenant  contends  in
     substance that the prime tenant did not submit any evidence  of  the  fair
     rental value of the furnishings to the Administrator, that in the  absence
     of such evidence the Administrator correctly fixed the fair  rental  value
     of the furnishings  at  10%,  and  that  even  though  the  administrative
     regulation fixing the charge for furnishings at 10% of the  rent  was  set
     aside in Kranz, supra, the 10% rule was reinstated by the Omnibus  Housing
     Act of 1983. 

     The Commissioner is of the opinion that this petition should be denied.

     The New York  City  Conciliation  and  Appeals  Board  (CAB),  the  agency
     formerly charged with enforcing the  Rent  Stabilization  Law,  adopted  a
     policy concerning subleases whereby a lessor of an  unfurnished  apartment
     who sublets the apartment fully furnished was entitled to an  increase  in
     the lawful stabilization rent not exceeding 10%.

     In Kranz, supra, the court held that the CAB acted arbitrarily in limiting 
     a prime tenant to a 10% increase over the rent reserved in the prime lease 
     for the sublet of a lavishly refurnished apartment  and  where  the  prime
     tenant had submitted  to  the  CAB  an  inventory  and  valuation  of  the
     furnishings in the apartment.

     Subsequent to  the  Kranz  decision,  the  Omnibus  Housing  Act  of  1983
     codified the CAB's policy of limiting the rent surcharge for  a  furnished
     sublet to 10%.

     A review of the record in the instant case indicates  that  the  subtenant
     occupied the subject apartment pursuant to a six month sublease commencing 
     on November 30, 1981 at a monthly rental of  $7,000.00.   The  lease  also
     required the subtenant to pay a security deposit of $14,000.00.   Attached
     to the sublease was a two page inventory listing the value and location of 
     several furnishings contained in the  subject  apartment.   The  subtenant
     vacated the subject apartment on December 23, 1981, less  than  one  month
     after moving in.

     The Commissioner finds that the ruling in Kranz, supra, does not apply  to
     the instant case because the subtenant filed his complaint on  August  29,
     1984 when the 10% rule codified by the Omnibus Housing Act of 1983 was, 

          DOCKET NUMBER: BD 410325-RO
     and still is, in effect.  Additionally, the Commissioner  notes  that  the
     prime tenant did not submit any probative evidence, such  as  receipts  or
     certificates of authenticity, to substantiate the value of the furnishings 
     in the subject apartment.  Accordingly, the Commissioner  finds  that  the
     Administrator correctly established the lawful stabilization rent for  the
     sublet by limiting the rent increase for a furnished sublet to 10%.

     This order may upon the expiration of the period in which the prime tenant 
     may institute a proceeding pursuant to Article 78 of  the  Civil  Practice
     law and Rules, be filed and enforced as a judgment.

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

     ORDERED, that this petition be, and the same hereby is, denied,  and  that
     the District Rent Administrator's  order  be,  and  the  same  hereby  is,
     affirmed.  The total overcharge including excess security is $18,913.02.



                                                     ELLIOT SANDER
                                                   Deputy Commissioner


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