STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
------------------------------------X S.J.R. NO. 385
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: BF 410028-RO
Herman Management, Inc., DRO DOCKET NO.: T/C47669-G
TENANT: Laura Vega
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART AFTER RECONSIDERATION PURSUANT TO COURT ORDER
This Order and Opinion is issued pursuant to judgment entered on May 5,
1987 by Mr. Justice Harold J. Reynolds which remitted the proceeding to
the Division of Housing and Community Renewal for further consideration.
The Commissioner notes that this proceeding was initiated prior to April
1, 1984. Sections 9 NYCRR 2526.2 (a) (4) and 2521.1 (d) of the Rent
Stabilization Code (effective May 1, 1987) governing rent overcharge
and fair market rent proceedings provide that determination of these
matters be based upon the law or code provisions in effect on May 31,
1984. Therefore, unless otherwise indicated, reference to Sections of
the Rent Stabilization Code (Code) contained herein area to the Code in
effect on April 30, 1987.
The tenant originally commenced this proceeding by filing a complaint of
rent overcharge with the former New York City Conciliation and Appeals
Board (CAB) concerning housing accommodations known as Apartment 3L, 10-
22 Fairview Avenue, New York, New York . The tenant took occupancy of
the subject apartment pursuant to a lease which commenced on January 1,
1979 and expired on December 30, 1980 at a rental of $193.07 per month.
The owner was served with a tenant's complaint and requested to submit
leases or rent ledgers reflecting a complete rental history for the
subject apartment or a current rent roll if it was missing any lease
documents for any period of tenancy since the base date. The owner
submitted leases for the subject apartment dating from July 1, 1976 and
a letter in which it explained that it had no prior leases because the
subject building had previously been under receivership due to
foreclosure. The owner also submitted a current rent roll.
In Opinion Number 23,294, issued November 18, 1982, the CAB determined
that the owner had failed to provide a full rental history as demanded
and established the lawful stabilization rent by presuming that the
subject apartment had been vacancy decontrolled prior to July 1, 1974
and utilizing the 1974 rent determined by the Division of Rent Control.
Subsequent thereto, the owner requested reconsideration of Opinion
Number 23,294, asserting that the CAB had failed to acknowledge the
rental data it submitted. The CAB granted the owner's request and
issued an amended Opinion on March 8, 1984 which found that the owner
had not provided a full rental history and recalculated the lawful
stabilization rent for the subject apartment by utilizing the 1974
Maximum Collectible Rent as determined by the Division of Rent Control.
On appeal, the owner contends, in substance, that it had complied with
the directive of the Division's predecessor agency to provide a current
rent roll, that there was no rational basis upon which to conclude that
the tenant's rent should be reduced and rolled back and that therefore,
Opinion 23,294 is arbitrary and capricious.
The Commissioner is of the opinion that this petition should be granted
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,
1984, an owner will be held responsible only for his or her portion of
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 to 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; c) the prior tenant's rent, if known. Such procedure is a
recent modification of the standard default method of computation, which
remains in effect in all other cases, in which the legal rent would be
the lowest of the three amounts.
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.
In the instant case, the three applicable rental amounts are:
1. The lowest rent in the line:
Apartment 2L rent: $227.23.
2. The current tenant's initial rent minus any
allowance for the tenant's initial lease:
$193.07 minus an 11«% allowance (6«% guideline
increase plus 5% vacancy allowance)
pursuant to Rent Guidelines Board Order
Number 10, 10a = $173.16.
3. The prior tenant's last rent: $183.00
The average of these combined amounts is $194.46. However, since the
lawful rent cannot be more than the amount actually charged, it is
reduced to $193.07, which was the complainant's initial rent. As a
result, total overcharges are determined to be $1,870.01, as documented
in the enclosed rent calculation chart affixed hereto and made a part
The Commissioner has determined in this Order and Opinion that the owner
collected overcharges of $1,870.01. 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.
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 shall be permitted to pay off the arrears in
twenty four equal monthly installments. Should the tenant vacate after
the issuance of this order or have already vacated, said arrears shall
be payable immediately.
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
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.
JOSEPH A. D'AGOSTA