BE610213RO



                                  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

          ------------------------------------X 
          IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
          APPEAL OF                              DOCKET NO.BE610213RO
                                              :  DRO DOCKET NO.B3100864R
          DAVID GARBER                     

                                PETITIONER    :  TENANT:  AGATHA PERRY

          -----------------------------------X                             

           ORDER AND OPINION GRANTING IN PART PETITION FOR ADMINISTRATIVE      
                                     REVIEW

               On May 18, 1987,  the above-named petitioner-owner filed a 
          Petition for Administrative Review against an order issued on April 
          14, 1987, by the Rent Administrator, 92-31 Union Hall Street, 
          Jamaica, New York, concerning the housing accommodations known as 
          2259 Creston Avenue, Bronx , New York, Apartment No. 3E, wherein the 
          Administrator established the legal stabilized rent by using 
          approved default procedures and directed the owner to refund an 
          overcharge of $2,330.14 inclusive of excess security and interest on 
          the overcharge occurring on or after April 1, l984.

               The Commissioner has reviewed all of the evidence of record and 
          has carefully considered that portion of the record relevant to the 
          issues raised in the administrative appeal.

               This proceeding was commenced on March 31, l984 when the tenant 
          filed a complaint of rent overcharge.

               In answer to the complaint, the owner stated that he had 
          purchased the subject building pursuant to a foreclosure sale and 
          had received no rental records from the prior owner.

               Based upon the owner's failure to provide a full rental 
          history, the Administrator established the lawful stabilization rent 
          as of February 1, 1985 at $248.48 and directed the owner to refund 
          overcharges of $2,330.14 inclusive of excess security and interest 
          on the overcharge occurring on or after April 1, l984.

               In his appeal, the owner asserts that he was unable to provide 
          a rental history because he had taken title to the subject building 
          pursuant to a foreclosure action in August 1983 and that he had not 
          received a complete set of rent records from the prior owner.  
          Moreover, the owner contends that he should not be held liable for 
          failing to produce rent records when the DHCR could have inspected 
          its own files to ascertain the correct rent either in the Maximum 
          Base Rent Master Building Rent Schedules or in the registered rent 
          pursuant to Section 2526.1 of the Rent Stabilization Code.  The 
          owner also asserts that the tenant had no basis for a complaint.







          BE610213RO

               The owner submits a copy of his deed in substantiation of his 
          assertion.

               In response to the petition, the tenant contends that she filed 
          her complaint after learning of the appropriate agency to contact 
          about the rent.

               The Commissioner is of the opinion that this petition should be 
          granted in part.

               With respect to the alleged failure of the Administrator to 
          examine DHCR records for the base rent, the Commissioner notes that 
          such information is not available in the agency's records but should 
          be provided by owners who are enjoined to maintain such records.  
          The Maximum Base Rent Schedules to which the owner refers are rent 
          schedules for rent controlled apartments and differ significantly 
          from base rents for rent stabilized apartments.  Since this 
          complaint, which was filed before April 1, l984, predates 
          registration requirements, the owner cannot rely on the registered 
          rent to fulfill the need to submit base date rental data.



                Code Section 2526.1(f) provides in pertinent part that where 
          no records sufficient to establish the legal regulated rent were 
          provided at a judicial sale, in the absence of collusion or any 
          relationship between a current owner and any prior owner, a current 
          owner who purchases at such judicial sale shall be liable only for 
          his or her portion of the overcharge and shall not be liable for 
          treble damages upon such portion resulting from overcharges caused 
          by any prior owner.  Section 2526.1(f) further provides that for 
          overcharges collected prior to April 1, l984, an owner will be held 
          responsible only for his or her portion of the overcharges.

               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 directing 
          the DHCR to modify default procedures for certain owners, DHCR has 
          adopted 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 complaining tenant's initial lease.

               Application of this new policy to the instant proceeding would 
          necessitate correction of computational errors in the 
          Administrator's order, rendering a harsher result than contained in 
          the Administrator's order.  This is so because the Rent 
          Administrator's order did not freeze the rent for any period as 
          required.    Since the tenant herein did not file her own appeal, 
          the Commissioner declines to apply this new policy.


          BE610213RO


               However, review of the record discloses that the Administrator 
          failed to apportion the overcharge between the current owner and 
          prior owners as is required by Code Section 2526.1.  Accordingly, 
          the Commissioner has recomputed the current owner's portion of the 
          overcharge from September 1,1983 through January 31, 1987 at 
          $1114.06 inclusive of  interest on the overcharge
          occurring on or after April 1, l984.  Excess security is eliminated 
          since the tenant vacated the subject apartment.

               Since the record indicates that the tenant has vacated the 
          subject premises, a copy of this Order and Opinion is being sent to 
          the current tenant in occupancy,

               The tenant may seek to recover that portion of the overcharge 
          collected by the prior owner ($1192.06) from the prior owner in a 
          court of competent jurisdiction

               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 $1114.06.  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.  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, 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.

          ISSUED

                                                                        
                                          JOSEPH A. D'AGOSTA
                                          Deputy Commissioner



                     









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