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
APPEALS OF DOCKET NO.BF110014RT
REILLEY AND BAUER AND : DRO DOCKET NO. Q3118670R
GRENADIER REALTY CORP.
ORDER AND OPINION GRANTING OWNER'S PETITION FOR ADMINISTRATIVE
REVIEW AND DENYING TENANT'S PETITION FOR ADMINISTRATIVE REVIEW
On June 15, 1987, the above-named petitioner-tenant filed a
Petition for Administrative Review against an order issued on May
11, 1987 revoking the Administrator's earlier order issued under
docket number Q3118670R on October 8, 1986, by the Rent
Administrator, 92-31 Union Hall Street, Jamaica, New York,
concerning the housing accommodations known as 73-35 Little Neck
Parkway, Glen Oaks, New York, Apartment No. 1. On February 4, 1988,
the above named petitioner-owner filed a Petition for Administrative
Review against an order issued on January 21, 1988 which superseded
the earlier order issued on October 8, 1986 which was revoked on May
11, 1987. The January 21, 1988 order determined that the owner had
overcharged the tenant. These petitions are being consolidated for
The Administrative Appeals are being determined pursuant to the
provisions of Sections 2526.1 and 2527.8 of the Rent Stabilization
The issue herein is whether the Rent Administrator's orders
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 appeals.
This proceeding was originally commenced by the filing in
February, 1984 of a rent overcharge complaint by the tenants who
stated that they first moved to the subject apartment in July, 1977.
In answer to the tenants' complaint, the owner submitted a
rental history for the subject apartment.
In Order Number Q3118670R (CDR 24,188) issued on October 8,
1986, the Rent Administrator determined that a rent overcharge of
$7297.44 had occurred based on a rental history from May 1, 1969
(not all leases subsequent to May 1, 1969 were supplied) and
directed the owner to refund such overcharge to the tenant.
The owner filed an appeal against the October 8, 1986 order and
said appeal was dismissed as untimely filed on January 27, 1987
under docket number AL110182RO. The owner then filed an Article 78
petition in Supreme Court against the dismissal order but in a
letter to the Court dated May 15, 1987 discontinued such proceeding
without prejudice pursuant to the May 11, 1987 order revoking the
October 8, 1986 order.
After the May 11, 1987 revocation order, the Rent Administrator
in Order Number Q3118670R as amended, determined, based on a rental
history from June 1, 1968 (all leases subsequent to June 1, 1968
were not submitted), that the tenant had been overcharged in the
amount of $7297.44 and directed the owner to refund such overcharge
to the tenant as well as to reduce the rent.
In the owner's petition, the owner contends in substance that
leases previously submitted to the agency were omitted and that the
rental history should be recalculated.
In the tenants' petition, the tenants contend in substance that
the May 11, 1987 order of revocation is void as a matter of law
pursuant to Section 2529.9 of the Rent Stabilization Code in that
the revocation order was not issued prior to the date that the
proceeding for judicial review was commenced in the Supreme Court.
Therefore, the tenants urge, the prior order issued on October 8,
1986 must be reinstated.
The Commissioner is of the opinion that the owner's petition
should be granted and that the tenant's petition should be denied.
Regarding the tenant's petition, it is noted that Section
2529.9 of the Rent Stabilization Code provides in pertinent part
that the Commissioner may, prior to the date that a proceeding for
judicial review has been commenced in the Supreme Court pursuant to
Article 78 of the Civil Practice Law and Rules, issue a superseding
Order modifying or revoking any Order issued by him under this or
any previous code in certain circumstances. However in the instant
case, the Commissioner did not issue the revocation order. Rather
the Rent Administrator issued such order. Section 2527.8 of the
Rent Stabilization Code which deals with DHCR orders issued prior to
administrative review provides in pertinent part that the DHCR, on
application of either party, or on its own initiative, may issue a
superseding order modifying or revoking any order issued by it under
this or any previous Code where the DHCR finds that such order was
the result of illegality, irregularity in vital matters or fraud.
In such code section there is no provision that the DHCR cannot
revoke an order if an Article 78 proceeding is already pending. In
addition, it is noted that the Article 78 proceeding only involved
the procedural question of whether the owner's petition against the
earlier order was timely and the question of the overcharge was not
before the Court on the merits. Further, the owner only agreed to
withdraw the Article 78 proceeding because the order it was
appealing was revoked and reconsidered by the Rent Administrator.
In these circumstances, the Commissioner is of the opinion that the
DHCR retained jurisdiction over the merits of the case and could
properly revoke the earlier order and reconsider the case.
Accordingly, the tenants' petition is hereby denied.
With regard to the owner's petition, 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
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. An examination
of the rent records from April 1, 1980 discloses that no rent
overcharge occurred. Therefore, the Rent Administrator's order
finding a rent overcharge must be revoked.
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 is permitted to pay off the
arrears in 24 equal monthly installments. Should the tenant vacate
after the issuance of this order or have already vacated, said
arrears shall be payable immediately.
THEREFORE, in accordance with the Appellate Division ruling in
JRD, it is
ORDERED, that the owner's petition for administrative review
be, and the same hereby is, granted, that the tenant's petition be,
and the same hereby is, denied, that the order of the Rent
Administrator be, and the same hereby is, revoked, and it is found
that no rent overcharge occurred.
JOSEPH A. D'AGOSTA