BF110014RT, CB110319RO

                                    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
            APPEALS OF                             DOCKET NO.BF110014RT
                                                             CB110319RO
                 REILLEY AND BAUER AND          :  DRO DOCKET NO. Q3118670R
                 GRENADIER REALTY CORP.                                 

                                  PETITIONERS   : 
            ------------------------------------X                             
              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            Review against an order issued on January 21, 1988 which superseded 
            the earlier order issued on October 8, 1986 which was revoked on May 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 
            disposition herein.

                 The Administrative Appeals are being determined pursuant to the 
            provisions of Sections 2526.1 and 2527.8 of the Rent Stabilization 
            Code.

                 The issue herein is whether the Rent Administrator's orders 
            were 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 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.         
                   








          BF110014RT, CB110319RO





                 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 




          BF110014RT, CB110319RO




            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 











          BF110014RT, CB110319RO

            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.

            ISSUED



                                                                          
                                            JOSEPH A. D'AGOSTA
                                            Deputy Commissioner





                       










          BF110014RT, CB110319RO




























    

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