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

          APPEAL OF                              DOCKET NO. BH410337RO
                                              :  DRO DOCKET NO. TC048795G

                                PETITIONER    : 

               On August 7, 1987, the above-named petitioner-owner filed a 
          Petition for Administrative Review against an order issued on July 
          2, 1987, by the Rent Administrator, 92-31 Union Hall Street, 
          Jamaica, New York, concerning the housing accommodations known as 
          1394 York Avenue, New York, New York, Apartment No. 3B wherein the 
          Rent Administrator determined that the owner had overcharged the 
               The Commissioner notes that this proceeding was filed prior to 
          April 1, 1984.  Sections 2526.1 (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 March 
          31, 1984.  Therefore, unless otherwise indicated, reference to 
          Sections of the Rent Stabilization Code (Code) contained herein are 
          to the Code in effect on April 30, 1987.

               The Administrative Appeal is being determined pursuant to the 
          provisions of Section 42A 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 in 1977 by the tenant's filing of 
          a fair market rent adjustment application in which the tenant stated 
          in substance that she first moved to the subject apartment in June, 
          1976, at a rental of $330.00 per month; and that the current owner 
          had purchased the subject premises in August, 1977.

               In an answer to the tenant's application, the current owner in 
          a response dated June 16, 1980, stated in substance that the subject 
          apartment was already a rent stabilized apartment in 1974 and 
          submitted a copy of the 1974-75 maximum base rent and maximum 
          collectible rent schedule for the subject premises.  Said schedule 


          listed all rent controlled apartments as of 1974-75 and did not list 
          the subject apartment.

               In a response dated October 14, 1980, the prior owner's 
          attorney stated in substance that his client sold the building in 
          1977 and that most of the records covering the year 1974 were 
          destroyed.  Attached to such response was a statement that the 
          subject apartment was not rent controlled in 1973  but rented at a 
          rental of $300.00; that the owner no longer had a copy of the 1973 
          lease; that the subject apartment was then rented pursuant to a 
          lease commencing May 1, 1975 for $325.00 with a prior tenant and was 
          then rented to the tenant herein.  No copies of any leases were 

               The tenant's complaint was then redocketed as a rent overcharge 
          complaint and the current owner was afforded an opportunity to 
          submit a complete rental history.  In response, the owner advised 
          that it purchased the subject premises in 1977 and no leases for the 
          subject apartment were turned over to it although the prior tenant 
          did pay a rent of $325.00 per month.  In a final notice of pending 
          default sent to the owner on March 17, 1986, the owner was advised 
          of DHCR procedures to set the rent in the event that the owner 
          failed to submit a complete rental history.

               In Order Number CDR 30,720, the Rent Administrator, based on 
          the owner's failure to submit a complete rental history, determined 
          that a rent overcharge of $5667.80 had occurred including interest 
          on that portion of the overcharge occurring on and after April 1, 
          1984.  No apportionment of the overcharge between the current and 
          prior owners was made.

               In this petition, the current owner alleges in substance that 
          the owner was never given an opportunity to submit a complete rental 
          history; that the Rent Administrator had no basis for converting the 
          tenant's fair market rent appeal to a rent overcharge complaint; 
          that the Rent Administrator failed to serve the prior owner with a 
          copy of the tenant's complaint with an opportunity to submit an 
          answer; that the Rent Administrator failed to apportion the 
          overcharge between the current and prior owner; and that in any 
          event, in a default situation, the Rent Administrator should have 
          utilized the rent control maximum base rent in determining the 
          stabilized rent rather than using the complaining tenant's initial 
          rent minus the initial guidelines adjustment and vacancy allowance 
          as was done herein.  

               In answer to the owner's petition, the tenant stated in 
          substance that the Rent Administrator's order was warranted.

               The Commissioner is of the opinion that this petition should be 
          granted in part.

               Section 42A of the 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 produce such records to the 
          DHCR upon demand.

               In the instant case, contrary to the owner's contentions on 
          appeal, both the current and prior owners were served with a copy of 
          the tenant's application and afforded an opportunity to submit a 
          complete rental history, but were unable to do so.  Accordingly, the 
          Rent Administrator correctly used DHCR default procedures as 
          enunciated in the final notice of pending default to set the lawful 
          stabilized rent.  The DHCR was not required to use the maximum base 
          rent to set the lawful stabilized rent as urged by the owner in its 
          petition merely because the Conciliation and Appeals Board, the 
          agency formerly charged with enforcing the rent stabilization law 
          once used such method.  Further, due to the owner's failure to 
          submit a rental history needed to establish whether or not the 
          tenant herein was entitled to file a fair market rent appeal, it was 
          proper to convert the proceeding to a rent overcharge proceeding.  
          The owner was not prejudiced by such conversion as it was given an 
          additional opportunity to submit the complete rental history.  
          Accordingly, the determination of the lawful stabilized rent 
          utilizing DHCR default procedures was warranted.

               However, the owner is correct in its contention that it should 
          not have to pay any portion of the overcharge prior to its purchase 
          of the subject premises in August, 1977 since the tenant's complaint 
          was filed prior to April 1, 1984.  Accordingly, the owner is 
          responsible only for all overcharges occurring from September 1, 
          1977 onwards or $5040.95.  This order is issued without prejudice to 
          any action the tenant may have against the prior owner for the 
          refund of the overcharge which occurred prior to September 1, 1977 
          or $626.85.  The Rent Administrator's order is hereby amended to 
          reflect the above.

               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 

               This order may, upon the expiration of the period in which the 
          owner may institute a proceeding pursuant to Article 78 of the Civil 
          Practice Law and Rules, be filed and enforced in the same manner as 
          a judgment or not in excess of twenty percent per month thereof may 
          be offset against any rent thereafter due the owner.

               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 to show that the 
          owner herein is responsible for a total overcharge of $5040.95 - the 
          overcharge occurring from September 1, 1977 onwards.  In all other 
          respects, the Rent Administrator's order is affirmed.


                                          JOSEPH A. D'AGOSTA
                                          Deputy Commissioner



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