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

      APPEAL OF                              DOCKET NO. BI110060RO

                                          :  DISTRICT RENT OFFICE
           Leogro Realty Co.,                DOCKET NO. TC82880G
                                             TENANT: Joel Barnehama           
                            PETITIONER    : 

                                     IN PART

      On August 27, 1987, the above-named owner filed a petition for 
      administrative review of an order issued on July 22, 1987 by a District 
      Rent Administrator concerning the housing accommodations known as 65-15  
      Alderton Street, Rego Park, New York, Apartment No. 2D, wherein the  
      Administrator determined that the owner had overcharged the tenant.

      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 by the filing of an overcharge complaint 
      on January 4, 1984.

      On September 30, 1986, the owner responded to DHCR's Final Notice of 
      Pending Default by submitting the tenant's lease for the period of 
      December 15, 1982 through December 14, 1985 and a renewal offer signed 
      by the tenant.

      In the order here under review, the Administrator found that the owner 
      had failed to provide a complete rental history.  The Administrator 
      established the lawful stabilization rent by utilizing the default 
      procedure and found a rent overcharge.  In computing the lawful 
      stabilization rent the Administrator used the lowest rent in the subject 
      building for a three room apartment.   Apartment 5D was selected 
      at a rental of $275.00.  The total overcharges were determined to be 

      In the petition for administrative review, the owner alleges, among 
      other things, that in the proceeding before the Administrator there were 


      some notification irregularities based on the fact that the managing 
      agent's business office had moved.  Further, the owner alleges that the 
      Administrator incorrectly determined the lawful stabilization rent by 
      utilizing the rent for apartment 5D which the owner states was based on 
      a "sweetheart" lease.  The owner submits a copy of the alleged 
      "sweetheart" lease and notes that it is a five year lease given by the 
      prior owner.  Also, the owner alleges that the subject apartment was 
      duly registered in 1984 and the tenant was duly served.  The owner 
      concludes that because the tenant did not challenge the initial 
      registration, DHCR is precluded from considering the overcharge 

      The owner further asserts in the petition for administrative review that 
      because of delays in receiving the Administrator's order that the owner 
      should be permitted additional time to file supplemental pleadings.  The 
      record reflects that no supplemental pleadings were received by DHCR in 
      this case.

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

      The Commissioner finds that the due process rights of the owner were 
      fully protected.  While the owner did not respond to the initial 
      complaint, it did file a response to the Final Notice of Pending 
      Default.  The Final Notice of Pending Default clearly enumerated what 
      specific documentation was required to be submitted by the owner to 
      avoid default.  The owner failed to submit the required documentation.

      The Commissioner is of the opinion that the Administrator correctly 
      determined that the owner failed in its obligation to supply DHCR with 
      a complete rental history.  Accordingly, it was appropriate for the 
      Administrator to employ the default system of computing the lawful 
      stabilization rent.

      The owner's assertion that DHCR may not consider the overcharge 
      complaint because the tenant failed to object to the initial 
      registration is without merit.  The tenant's complaint was filed before 
      April 1, 1984 and was properly processed as an overcharge.  Had the 
      tenant's complaint been filed more than ninety days after the date he 
      was served with the initial registration, the April 1, 1984 rent would 
      have been established as the lawful stabilization rent.

      However, the Commissioner is of the opinion that the owner has 
      adequately shown that the lowest rent for a three room apartment in the 
      subject building was a "sweetheart" lease.  As such, the second lowest 
      rent should have been used by the Administrator in the calculations 
      (Apartment 4D at a monthly rental of $327.60) instead of $275.00 for 
      Apartment 5D.
      The Commissioner notes that in the course of revising the calculations 
      it was observed that the Administrator also erred by not freezing the 
      legal stabilization rent in accordance with the default procedure.  
      Accordingly, the  total overcharge as reflected in the enclosed 


      calculation chart is $10,934.67 which includes interest on post-April 1, 
      1984 overcharges.  Excess security has been removed from the total 
      overcharge since the apartment is now a co-op.

      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.

      THEREFORE, in accordance with 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 


                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner


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