Docket No.: CA 410189-RO
STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: CA 410189-RO
BIG APPLE TOWERS INC., DRO DOCKET NO.: L 3117287-R
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
AND MODIFYING ADMINISTRATOR'S ORDER
On January 28, 1988, the above-named petitioner-owner filed a
Petition for Administrative Review against an order issued on
December 24, 1987, by the District Rent Administrator, 10 Columbus
Circle, New York, New York, concerning housing accommodations
known as Apartment 10, 1278 First Avenue, New York, N.Y. wherein
the District Rent Administrator determined that the tenant had
The Commissioner notes at the outset that the Rent Administrator's
order incorrectly identified Apt. 6 as the subject apartment. The
petition likewise refers to Apt. 6 as the subject of this appeal.
In order to eliminate the disparity between the evidence of record
and the Rent Administrator's order, the Commissioner hereby
modifies the Rent Administrator's order to refer to Apt. 10 as the
subject of the Administrator's Order and this administrative
The Commissioner notes that this proceeding was initiated 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 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 of a rent
overcharge complaint by the tenant with the New York City
Conciliation and Appeals Board, one of the predecessor agencies to
the DHCR. The tenant took occupancy in November 1976 without a
lease at a monthly rent of $220.00.
At the time the tenant filed his complaint, the subject building
was owned by 402-69 Associates which was served with a copy of the
complaint and was requested to submit rent records to prove the
lawfulness of the rent being charged. In its answer, 402-69
Associates responded that it purchased the premises in 1981, and
Docket No.: CA 410189-RO
that it received no leases and little documentation upon
conveyance, and that the tenant's rent at the time of conveyance
was $300.00. The owner did supply a rent roll for October, 1984
and copies of leases for the subject apartment covering the period
from August 1, 1981 through July 31, 1986.
By subsequent correspondence, the tenant advised that the premises
had been purchased by Big Apple Towers, Inc.
On June 23, 1986, Big Apple Towers, Inc. was served with a copy of
the tenant's complaint with answer forms and was requested to
submit rent records to prove the lawfulness of the rent being
charged. The owner was advised that failure to submit the
requested documentation would result in a determination based on
the information in the agency's records.
On July 3, 1986 Big Apple advised that it purchased the building
in November 1984, that it did not have any rent documents in its
possession, and that the previous landlords had the information.
On September 3, 1986 a final notice of pending default was sent to
402-69 Associates. It was returned as not forwardable.
On October 1, 1986 a final notice of pending default was sent to
Big Apple Towers. On October 15, 1986 Big Apple responded,
stating that it did not own the building until 1984 and that it is
not responsible for the rent overcharges. Enclosed with the
answer was a report of statutory decontrol indicating that
apartment 10 was vacancy decontrolled in April 1976, as well as a
copy of the complaining tenant's lease and renewals for the period
August 1, 1981 through July 31, 1986.
In the Order under appeal herein, the District Rent Administrator,
citing the owners' failure to submit the required rent records,
established the lawful stabilization rent at $340.38 as of August
1, 1984 through July 31, 1986, and ordered a refund of the
overcharges in the amount of $2,479.60 including interest on the
overcharges collected on or after April 1, 1984.
In this petition the owner contends that the District Rent
Administrator's Order is incorrect and should be reversed because
1) the owner was not named as a party to the complaint and did not
receive notice of or have an opportunity to respond to the
overcharges which it is now liable to pay, 2) all rent increases
were calculated pursuant to applicable guidelines based on
documentation the owner received at closing from the prior owner,
Docket No.: CA 410189-RO
3) the overcharge award includes overcharges in excess of the
limitation contained in CPLR 213-a, and 4) the owner should
either be given additional time to produce the documents or a
hearing on the issue of the impossibility of obtaining same should
In answer to the petition the tenant contends that the order
should be upheld in light of the rent increases imposed and
owner's refusal to provide a rent history.
The Commissioner is of the opinion that this petition should be
Petitioner's assertions that it did not have an opportunity to
respond to the overcharges which it is now liable to pay are
contrary to the record. The petitioner was notified and submitted
a response on two occasions prior to the issuance of the
While the Administrator stated in the order that the owner had not
supplied a full rental history, the calculation of the overcharges
contained in the order was not the result of the application of
the Section 42A default procedure. Instead, based on the
submissions of the owner and tenant, the Administrator accepted
the tenant's initial rent as the lawful base rent applying
applicable guidelines thereafter. The overcharge did not result
from the owner's failure to submit records and the application of
the default procedure, but from rent increases in excess of the
guidelines. Although the initial overcharge occurred under a
prior owner, the current owner has an independent obligation to
ensure that it is collecting only lawful rents. Resort to a
hearing, on the issue of impossibility of producing required
documents is not warranted. Petitioner has not specified facts or
submitted evidence in support of such contention either in this
proceeding or in the proceeding before the Administrator.
Moreover, the Administrator's order was not based on the failure
to submit documents, as previously stated herein.
The Administrator, however, failed to specify the exact amounts of
overcharge attributable to the prior and current owner. Section
2526.1(f) of the current Rent Stabilization Code provides in
pertinent part that for overcharges collected prior to April 1,
1984, an owner will be held responsible only for his or her
portion of the overcharges. For overcharges collected on or after
April 1, 1984, a current owner is responsible for overcharges
collected by it and any prior owner after that date. A former
owner is jointly and severally liable for overcharges it collected
between April 1, 1984 and the date of transfer of ownership.
Despite the owner's assertions it purchased the subject property
in 1984, the evidence is that the present owner took title to the
premises by deed dated April 1, 1985. Therefore, the overcharges
Docket No.: CA 410189-RO
through July 31, 1986 owed by the current and former owners are as
follows: former owner, $1,389.80 (through March 31, 1984); former
and current owner jointly and severally, $446.30 (April 1, 1984 -
July 31, 1984, 4 months @ $32.89/mo., August 1, 1984 - March 31,
1985, 8 months @ $35.19/mo. including interest); present owner,
$608.31 (April 1, 1985 - July 31, 1986, 16 months @ $35.19
including interest) plus $35.19 excess security.
Petitioner cites CPLR 213a as limiting the amount of overcharge
that can be awarded in this case. CPLR 213a is inapplicable to
this proceeding as such section applies to a statute of
limitations in actions involving overcharges which commenced after
April 1, 1984.
In this regard, 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 such apartment
became vacancy decontrolled, if later, and produce them to the
Division of Housing and Community Renewal upon demand.
However, Section 26-516 of 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
produce rent records for more than 4 years prior to the most
recent registration, and concomitantly, established a 4 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 right 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 4 years prior to April
1, 1984 of their 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. Mgt. v.
Eimicke, 148 A.D.2d 610, 539 N.Y.S.2d 667 (App. Div. 2d Dep't
Docket No.: CA 410189-RO
1989), motion for leave to reargue or for leave to appeal to the
Court of Appeals denied (App. Div. 2d Dep't, 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 4 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 Dep't 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.
Since, in this case, the subject dwelling unit is located in the
First Department, the Commissioner finds that the Administrator
was not subject to a 4 year limitation in the calculation of the
This order may, upon the expiration of the period in which the
owner may institute a proceeding pursuant to Article Seventy-eight
of the Civil Practice Law and Rules, be filed and enforced by the
tenant in the same manner as a judgment or not in excess of twenty
percent thereof per month may be offset against any rent
thereafter due the owner.
THEREFORE, in accordance with the Rent Stabilization Law and Code,
ORDERED, that this petition be, and the same hereby is, denied and
the District Rent Administrator's order be, and the same hereby
is, modified to show Apartment 10 as the subject apartment and
affirmed in all other respects.