Docket No.:  CA 410189-RO
                                  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

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          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

                                  PETITIONER       
          ----------------------------------X                           
            
            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
          been overcharged.

          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
          appeal.

          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 
          be scheduled.

          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
          denied.

          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
          Administrator's order.

          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
          overcharges.

          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, 
          it is

          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.

          ISSUED:



                                                                        
                                          ELLIOT SANDER
                                          Deputy Commissioner


    

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