BG210137RO

                                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. BG210137RO

                                          :  DISTRICT RENT OFFICE
           Kingswood Management,             DOCKET NO. K3102877R
                                             
                                             TENANT: Arthur Edwards           
                
                            PETITIONER    : 
      ------------------------------------X                             

          ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
                                         
      On July 27, 1987, the above-named owner filed a Petition for 
      Administrative Review against an order issued on July 14, 1986 by the 
      Rent Administrator concerning the housing accommodations known as       
      441 Brooklyn Avenue, Brooklyn, New York, Apartment No. 1F wherein the 
      Rent Administrator determined that the owner was in default due to its 
      failure to submit the requisite rental history.  The petition is deemed 
      timely filed since the July 14, 1986 Rent Administrator's order was not 
      mailed to the correct owner.

      The Commissioner notes that the July 14, 1986 Rent Administrator's order 
      was subsequently revoked and superceded by an amended Rent 
      Administrator's order, issued November 19, 1987 under the same Docket 
      Number (K3102877R), in order that Brooklyn Management Co. be included as 
      a party in the proceeding before the Rent Administrator.  However, since 
      the Administrator's findings in the amended order remain pertinent to 
      the issues raised by the petitioner, the Commissioner has determined 
      that said amended Rent Administrator's order be considered for appeal 
      herein.

      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 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 March 29, 1984  
      of a rent overcharge complaint by the tenant.












          BG210137RO


      In answer to the tenant's complaint, the owner submitted rent records 
      dating back to at least April 1, 1980.

      In Order Number K3102877R, 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 $850.87, including 
      excess security and interest on that portion of the overcharge occurring 
      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, a complete 
      rental history was submitted as requested.

      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 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. 






          BG210137RO

      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.

      Given that 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.  In the instant case, the 
      record contains a rental history going back to April 1, 1980.  Since the 
      base rent for the subject apartment was properly established as the rent 
      charged on April 1, 1980 based on the requisite rental history supplied, 
      the Administrator's application of the Section 42A default procedure in 
      establishing the base rent was not warranted.

      Furthermore, for the period April 1, 1980 through August 10, 1984 used 
      in the Administrator's calculations, there is no evidence that the 
      tenant paid any excess in rents lawfully allowed under the applicable 
      rent guidelines.

      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 
      twelve 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, 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 












          BG210137RO

      occurred.


      ISSUED:



                                                                    
                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner
    

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