STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: BD 410325-RO
DRO DOCKET NO.: ZL 000740-R
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
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.