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.BG110108RO
: DRO DOCKET NO.Q3121902R
Three Towers Associates, TENANT: Barbara Jane
Schaefer
PETITIONER :
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
On July 20, 1987 the above-named owner filed a Petition for
Administrative Review against an order issued on November 21, 1986
by the Rent Administrator concerning the housing accommodations
known as 270 Grand Central Parkway, Floral Park, New York,
Apartment No.9s wherein the Rent Administrator determined that the
owner was in default due to its failure to submit the requisite
rental history.
The Commissioner notes that, in response to this Petition, the
complainant tenant was correct in her assertion that said peition
was not filed within the 35 day period of the Rent Administrator's
order. However, the Rent Administrator's order, in addition to
other correspondence of the prior proceeding, was never served on
the correct owner by the D.H.C.R. Accordingly, this petition must
deemed timely.
The Administrative Appeal is being determined pursuant to the
provisions of Section 2526.1 of the Rent Stabilization Code.
The issue herein is whether the Rent Administrator's order finding
the owner in default and to have overcharged the complainant tenant
under the Section 421-a rent program 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.
This proceeding was originally commenced by the filing on February
10, 1984 of a rent overcharge complaint, wherein the complainant
tenant alleges being overcharged under the Section 421-a rent
program.
The record, in the proceeding before the Rent Administrator,
contained a rental history dating back to April 1, 1980.
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BG110108RO
In Order Number Q-3121902R, the Rent Administrator determined that,
due to the owner's failure to submit the requisite rental history,
the base rent and subsequent lawful stabilization rents were based
on the Section 42A default procedure, effecting a rent overcharge
of $9,960.99, including excess security and treble damages on that
portion of the overcharge occurrring on and after April 1, 1984.
In this petition, the owner requests reversal of the
Administrator's order and contends in substance that, among other
things, the owner never received from the DHCR the original
overcharge complaint or subsequent Notice of Pending Default, and,
therefore, could not have submitted the rent records as requested
in the proceeding before the Rent Administrator.
The Commissioner is of the opinion that this petition should be
granted.
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 ffiled 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
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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 of 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., Deb.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.
Given that, in the instant case, the subject dwelling unit is
located in the Second apartment, 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, and,
concommitantly, establishing the base rent as the rent charged on
April 1, 1980. Since the rent charged on April 1, 1980 and the
rents charged subsequent thereto were corroborated in the
proceeding before the Rent Administrator by the submission therein
of a rental history dating back to April 1, 1980, the
Administrator's application of the Section 42A default procedure in
establishing the base rent and subsequent lawful stabilization
rents was not warranted.
Further, in accordance with Section 421-a of the Real Property Tax
Law, the owner was permitted to increase, annually, the lawful
stabilization rent by 2.2 percent of the first lease rent, which
was $575.00, thereby establishing nine annual rent increases of
$12.65 commencing with the first lease. In addition, the owner was
entitled to guideline rent increases for the
September 1, 1979 vacancy lease and September 1, 1982 renewal
lease. The Commissioner notes that, after November 19, 1982, the
2.2 percent annual increase, although part of the legal rent, could
not be included as a part of the base rent for the purpose of
computing subsequent guideline rent increases. Accordingly, for the
period April 1, 1980 through August 31, 1985 considered in the
BG110108RO
Administrator's determination, there is no evidence that the tenant
paid any excess in rents lawfully allowed under the Section 421-a
rent program as alleged in said tenant's overcharge complaint.
Therefore, the 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 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.
THEREFORE, in accordance with the Appellate Divisions ruling in
JRD, and Section 421-a of the Real Property Tax Law, it is
ORDERED, that this petition for administrative review be, and the
same hereby is, granted, that the order of the Rent Administrator
be, and the same hereby is, revoked, and it is found that no rent
overcharge under the Section 421-a rent program occurred.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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