OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          APPEAL OF                              DOCKET NO.  BG210326RO  
                                              :  DRO DOCKET NO.  ZAC210095RV
          KATZ REALTY GROUP                                     

                                PETITIONER    :  TENANT:  Zunya Pertsis 

               On July 29, 1987, the above-named petitioner-owner filed a 
          Petition for Administrative Review against an order issued on June 
          24, 1987, by the Rent Administrator, 92-31 Union Hall Street, 
          Jamaica, New York, concerning the housing accommodations known as 
          1725 Emmons Avenue, Brooklyn, New York, Apartment No. B-4
          wherein the Rent Administrator directed the Owner to tender a lease 

               The Administrative Appeal is being determined pursuant to the 
          provisions of Section 2522.5 of the Rent Stabilization Code.

               The issue herein is whether the Rent Administrator's order was 

               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 commenced when the tenant filed a complaint 
          alleging that the owner had not offered a renewal lease.  The tenant 
          submitted copies of various correspondence from the owner as well as 
          a notification from the New York City Housing Authority regarding 
          the tenant's Section 8 eligibility for rent subsidy.

               In answer to the complaint, the owner stated that it had 
          offered a lease in conformity with the requirements of the Rent 
          Stabilization Law which the tenant had refused because it included 
          a rent increase for Major Capital Improvements (MCI) that the 
          Section 8 program would not subsidize as such increase placed the 
          rent above the fair market value.  The owner stated that since it 
          had never renewed the Section 8 lease, the Section 8 program did not 

                In the order under review, the Administrator, basing its 
          findings on the alleged failure of the owner to interpose an answer, 
          deemed the tenant's allegations admitted and directed the owner to 
          offer the tenant a renewal lease.


                In its appeal, the owner contends that the order should be 
          reversed for the following reasons:  1) the owner timely responded 
          to the complaint;  2) the tenant does have  a renewal lease;  3) the 
          owner feels the main issue is the MCI increase  the Section 8 
          program refuses to pay. 

               The Commissioner is of the opinion that this petition should be 

               The record contains the owner's response which was timely 
          submitted.  Therefore, that part of the Administrator's order is 
          changed to eliminate the reference of a failure to respond.

               However, pursuant to Code Section 2522.5(g), an owner must 
          renew on the same terms and conditions as the expired lease. Section 
          8 assistance does not remove a unit from rent stabilization and 
          owners must offer a renewal lease on the same terms and conditions, 
          including acceptance of the Section 8 subsidy.  Fishel v. CAB, 123 
          Misc.2d 841, 474 N.Y.S.2d 908 (Sup. 1984);  Tann v. Thompson, 112 
          Misc.2d 392, 446 N.Y.S.2d 959 (NYC Civ. 1981).  Accordingly, the 
          Rent Administrator did not err in its direction.

               The rent to be set in the Section 8 lease, as well as the 
          amount of the subsidized portion is a contractual matter governed by 
          Federal Regulation.  
                Review of registration records discloses that the registration 
          of the subject premises contains both the legal stabilized rent and 
          the portion paid directly by the tenant and that the owner has 
          complied with the order.

               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,denied, 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
                                          Deputy Commissioner



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