BE410445RO
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 BE410445RO
BE410450RO
: DRO DOCKET NO. 082002G as
CENTURY OPERATING CORP. amended
TENANT: Lee Moss
PETITIONER :
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On May 8, 1987, the above-named petitioner-owner filed a
Petition for Administrative Review against an order issued on
April 3, 1987, by the Rent Administrator, 92-31 Union Hall Street,
Jamaica, New York, concerning the housing accommodations known as
444 East 82nd Street, New York, Apartment No. 7P wherein the
Administrator established the lawful stabilization rent and directed
the owner to refund an overcharge of $11,639.05 lncluding interest
on the overcharge occurring on and after April 1, 1984.
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.
The tenant commenced this proceeding in March 1984 by filing
a rent overcharge complaint. The tenant stated that she had made
numerous attempts to get a rent history of the subject apartment
without success and that she believed she was being overcharged.
In answer to the complaint, the owner stated that since the
building had been purchased at foreclosure, it had been unable to
get complete rental records for tenants not in occupancy while the
building was in the hands of the receiver and thus was unable to
provide a complete rent history.
In the order herein appealed, the Administrator applied court-
approved default procedures to establish the legal stabilized rent
at $517.99 effective October 1,1984 and based thereon determined
that the owner had overcharged the tenant.
In this appeal, the owner contends that the order should be
reversed because:
1. the owner is not required to provide leases from the base
date because the property was purchased through a
foreclosure sale;
BE410445RO
2. the "three-pronged" method to determine the stabilized rent
should not have been utilized because it unduly penalized
the owner;
3. the Rent Administrator failed to consider "all factors
bearing upon the equities involved".
In response to the petition, the tenant contends that the order
should be upheld for the following reasons:
1. the owner has offered no excuse for its default;
2. the owner has failed to demonstrate a meritorious defense
in that it has not established that it purchased the
property at foreclosure;
3. the owner has not proved that it made a good faith effort
to get the missing leases;
4. the owner has been inconsistent in its statements regarding
the lease, alternately stating that it had no leases, or
that the tenant had examined the leases.
In reply, the owner states that the property was actually
purchased through a foreclosure sale by the prior owner in or about
February 1977. As the subsequent purchaser, it received only those
leases from the approximate date of the appointment of the Receiver
by the Supreme Court. The owner reiterates that it should not be
penalized by the use of the punitive three-prong default formula for
its failure to produce leases which it had never received due to the
circumstances under which the property was purchased.
The Commissioner is of the opinion that this petition should be
denied.
Where there are incomplete rent records in an overcharge
proceeding, DHCR currently establishes the legal regulated rent at
the lowest of: a) the lowest rent in the building for an apartment
with the same number of registered rooms; b) the complaining
tenant's initial rent, minus the guidelines; or c) the prior
tenant's last rent, if known. This rent is then frozen until the
end of the lease in effect at the time of issuance of the Rent
Administrator's Order.
Consistent with the exemptions from treble damage liability
and from responsibility for refunding overcharges collected by prior
owners extended to purchasers at a judicial sale under the Rent
Stabilization Code, and in consideration of court rulings that have
directed DHCR to modify the default procedures for certain owners
(e.g. trustees in bankruptcy), DHCR is adopting a new policy with
respect to the processing of overcharge cases involving judicial
sale purchasers. Where rent records are not available upon judicial
sale, DHCR will establish the legal regulated rent as the average
of:a) the lowest rent in the building for an apartment with the
same number of registered rooms; b) the complaining tenant's
initial rent, minus the guidelines; and c) the prior tenant's rent,
if known.
The legal regulated rent so established is to be frozen for
three years, or two lease terms, whichever is greater, starting with
the commencement date of the complainant's initial lease. The
rent, however shall not be frozen for more than four years.
BE410445RO
Although the instant owner was not the purchaser at a judicial
sale but was the subsequent purchaser, in consideration of all the
factors bearing upon the equities involved, the Commissioner has
compared the application of the policy related above with that of
the prior procedure and determines that owing to another error in
the Administrator's order, in the instant case, the failure to
freeze the default rent in any subsequent lease, the new policy
produces a harsher result than the Administrator determined.
Accordingly, the Commissioner declines to apply the new policy to
this proceeding and finds that the Administrator's order should be
affirmed.
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
increases.
The Commissioner has determined in this Order and Opinion that
the owner collected overcharges of $11,639.05. 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 or not in excess of
twenty percent per month of the overcharge may be offset against any
rent thereafter due the owner. Where the tenant credits the
overcharge, the tenant may add to the overcharge, or 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.
THEREFORE, in accordance with the provisions of the Rent
Stabilization Law and Code, it is
ORDERED, that this petition for administrative review be, and
the same hereby is, denied, and, that the order of the Rent
Administrator be, and the same hereby is, affirmed.
ISSUED
JOSEPH A. D'AGOSTA
Deputy Commissioner
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