Docket No.: CC 210310 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.: CC 210310-RO
WINDSOR PLACE CORPORATION, DRO DOCKET NO.: 032429
TENANT: Andrew Yosha
PETITIONER
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART AND REMANDING PROCEEDING TO THE ADMINISTRATOR
On March 2, 1988, the above-named petitioner-owner filed a
Petition for Administrative Review against an order issued on
February 18, 1988, by the Rent Administrator, 10 Columbus Circle,
New York, New York, concerning housing accommodations known as
Apartment 53 at 150 Remsen Street, Brooklyn, New York, wherein the
Rent Administrator determined that the tenant had been
overcharged.
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 issues raised by the administrative appeal.
The tenant originally filed a rent overcharge complaint with the
New York City Conciliation and Appeals Board, one of the
predecessor agencies to the DHCR, under Docket Number K-3106907-R.
The tenant took occupancy pursuant to a lease commencing November
1, 1983 and expiring October 30, 1984 at a monthly rent of
$624.00.
In answer to that complaint, the owner stated that it purchased
the building on September 13, 1983, and that, according to the
prior lease, the apartment was rent controlled prior to January
15, 1982; and that no overcharge exists. In support of this
contention, the owner submitted the lease for the period January
15, 1982 - January 14, 1984, and a rental history from that date.
Docket No.: CC 210310 RO
In Order Number CDR 31,041, issued on August 12, 1987, under
Docket No. K-3106907-R, the Administrator determined, based on the
rental history submitted by the owner, that no overcharge existed.
During the pendency of its overcharge complaint, on September 15,
1984, the tenant filed an objection to the initial apartment
registration, under Docket No. 32429, claiming, among other
things, that the rent being charged was not the legal rent.
The owner was served with a copy of the objection to registration,
and was requested to submit rent records to prove the lawfulness
of the rent being charged. In response, the owner submitted
copies of leases from January 15, 1982, and stated that the base
rent date for the apartment was January 15, 1982, the commencement
date of the first lease entered into after decontrol. On July 29,
1986, August 20, 1986, and March 9, 1987 the owner was requested
to submit the lease in effect on April 1, 1980, and all leases
subsequent thereto. The owner was further directed to submit a
list of those apartments of similar size which were under the Rent
Stabilization Law on November 1, 1983, the date the subject tenant
first occupied the apartment. On October 22, 1987, the owner was
requested to submit a copy of the DC-2 notice, with proof that it
was served to the first rent-stabilized tenant.
In response, on November 5, the owner alleged that the tenant was
served a copy of the RR-1 form, but never filed a timely
objection. The owner further cited Order No. CDR 31,041 in
support of its allegation that no overcharge existed, and that it
was required to submit a rental history only going back 4 years.
The owner further alleged that the nature of the tenant's
complaint was a rent overcharge, not a fair market rent appeal.
The tenant responded that he did not receive a notice of
decontrol.
On January 22, 1988 the owner was served with a Final Notice of
Pending Default, indicating that its failure to submit the
required information would result in the establishment of the
lawful stabilized rent by the Division's default procedure, and
that treble damages would be imposed on any willful overcharges
occurring after April 1, 1984.
The owner failed to submit the required information.
On February 18, 1988, in the order under appeal herein, under
Docket No. 32429, the Administrator determined that the statutory
criteria for processing a fair market rent appeal were met in
this case. Based on the special guidelines order promulgated by
the NYC Rent Guidelines Board, solely for use in determining fair
market rent, and absent comparables, the Administrator established
the Fair Market Rent as $282.46, and adjusted the initial legal
regulated rent as $282.46 effective January 15, 1982. The owner
Docket No.: CC 210310 RO
was further directed to recompute all lawful increases on or after
November 1, 1986 using the base rent of $339.40 per month. The
owner was directed to refund excess rent totalling $12,344.89,
including excess security, to the tenant.
In this petition, the owner contends that the Rent Administrator's
order, Docket No. 32429, should be reversed, stating that the
tenant did not file a timely fair market rent appeal, and that the
finding of no overcharge by the Administrator in order No. CDR
31,041 was correct.
The tenant, in response to the petition, states that his objection
to the rent was a fair market rent challenge; that the decision of
the Administrator under Docket No. CDR 31,041 was erroneous, since
the calculations were based upon faulty figures; and that order
No. 32429 should be upheld.
The Commissioner is of the opinion that this petition should be
granted in part.
Section 25 of the Code provides that a fair market rent appeal
application may be filed by the tenant of an apartment which was
subject to rent stabilization or rent control prior to July 1,
1971, and was vacated between January 1, 1974 and June 30, 1974,
both dates inclusive, or of an apartment which was subject to rent
control on June 30, 1974 and vacated thereafter.
The Commissioner finds no basis for a fair market rent appeal in
the instant proceeding. No documentation of the date of decontrol
has been submitted. There is no evidence that the prior tenant
who was treated as the first stabilized tenant was, in fact, the
first stabilized tenant. Accordingly, the Commissioner finds that
order No. 32429, establishing the fair market rent, should be
revoked.
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 the apartment became
subject to rent stabilization, if later) to date and to produce
such records to the DHCR upon demand.
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
Docket No.: CC 210310 RO
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
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 the instant case the subject dwelling unit is located in
the Second Department, the DHCR is constrained to follow the JRD
decision in determining the tenant's overcharge complaint,
limiting the requirement for rent records to April 1, 1980.
In this case, the owner asserts that the subject apartment was
rent controlled prior to January 15, 1982, but has submitted no
documentation to support this allegation. DHCR records do not
indicate a date of decontrol for the subject apartment. The owner
was therefore required to submit rent records from April 1, 1980,
but failed to do so. Based thereon, the Commissioner finds that
Docket No.: CC 210310 RO
the proceeding should be remanded to the Administrator to
determine the lawful stabilized rent based on the default
procedure.
The Commissioner notes that the proceeding that resulted in the
issuance of Order No. CDR 31,041 was a complaint of a specific
rent overcharge in the tenant's initial lease, in which the
Administrator only considered the preceding lease, and did not
consider all rents from April 1, 1980. It did not deal with a
complaint of general overcharge, as in this case.
THEREFORE, in accordance with the Rent Stabilization Law and
Code, it is
ORDERED, that this petition be, and the same hereby is granted,
that the District Rent Administrator's order No. 32429 be and the
same hereby is revoked, and the proceeding be and the same hereby
is remanded for recomputation of overcharges and penalties under
the default procedure.
ISSUED:
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ELLIOT SANDER
Deputy Commissioner
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