CC 410047 RT
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                             JAMAICA, NEW YORK    11433

          APPEAL OF                           DOCKET NO.: CC 410047-RT 

                    CYNTHIA WILSON,
                                              DRO DOCKET NOS.: L-3117811-RT
                                                               CDR 32726

                                              OWNER:  ABC PROPERTIES

                                       IN PART

          On February 26, 1992 the Commissioner granted the owner's request 
          for reconsideration and reopening of a proceeding wherein the 
          tenant's Petition for Administrative Review No. CC 410047-RT, 
          regarding Apartment 7G at 2020 Broadway, New York, New York was 
          granted on January 10, 1992 to the extent of granting treble 
          damages for a willful overcharge, based upon the owner's failure to 
          submit a full rental history to justify the rents charged, but 
          wherein the tenant's request for attorney's fees was denied.  In 
          that order, it was stated that the owner had not submitted an 
          answer to the tenant's petition.  In the request for 
          reconsideration the owner submitted an answer dated May 20, 1988, 
          as well as a mailing receipt and proof of the Division of Housing 
          and Community Renewal's (DHCR's) receipt of the answer.  In the 
          answer the owner contended that the subject building was previously 
          in receivership, that the records transferred were inadequate to 
          establish a complete rental history for the subject apartment, and 
          that both Section 2526.1(f) of the current Rent Stabilization Code 
          as well as a recent Appellate Division, 1st Department decision 
          provide that treble damages will not be imposed on overcharges 
          occurring because of a lack of rent records as the result of 
          foreclosure and judicial sale. 

          On March 17, 1992 the owner was requested to submit evidence that 
          the subject building went through receivership.  In response, the 
          owner submitted a December 14, 1976 deed in foreclosure granted by 
          a referee to GIT Industries, a predecessor-in-interest to the 

          CC 410047 RT

          current owner.

          The owner sent a copy of this submission to the tenant on April 3, 
          1992.  No reply has been received from her to date.

          The Commissioner is of the opinion that the tenant's petition 
          should be granted in part after reopening the appeal proceeding 
          upon reconsideration.

          Section 2526.1(f)(2) of the Rent Stabilization Code provides that:

               For overcharge complaints filed or overcharges collected 
               on or after April 1, 1984, a current owner shall be 
               responsible for all overcharge penalties, including 
               penalties based upon overcharges collected by any prior 
               owner.  However, in the absence of collusion or any 
               relationship between such owner and any prior owner, 
               where no records sufficient to establish the legal 
               regulated rent were provided at a judicial sale, a 
               current owner who purchases upon such judicial sale shall 
               be liable only for his or her portion of the overcharges, 
               and shall not be liable for treble damages upon such 
               portion resulting from overcharges caused by any prior 
               owner.  Such penalties shall be subject to the time 
               limitations set forth in paragraph (a)(2) of this 

          The owner has submitted a copy of a decision wherein the Appellate 
          Division, First Department in Matter of Round Hill Management Co., 
          NYLJ November 12, 1991, p. 25, col.6 upheld a lower court opinion 
          annulling treble damages imposed where there was a lack of rent 
          records due to the building having gone through foreclosure.  
          However, one of the reasons for the finding of a lack of 
          willfulness [i.e., the fact that the $200.00 rent in effect at the 
          time of purchase was equal to or lower than the rent charged for 
          any other identical apartments in the building gave that owner 
          reason to believe that the rent being charged was not unlawfully 
          high] does not apply to the present case where the complainant's 
          April 1, 1984 rent of $442.41 was higher than 22 of the other 39 3- 
          room apartments in the subject building, and where the lowest 
          stabilized rent was $298.41.  Further, while the DHCR might 
          consider that treble damages would not apply to overcharges 
          collected by a current owner who purchased at a judicial sale and 
          did not receive rent records sufficient to prove the lawfulness of 
          the rent charged, and who charged only lawful Guidelines 
          percentages of increase and other lawful increases above the rent 
          in effect at the time of the judicial sale, Section 2526.1(f)(2) 
          does not let the owner escape treble damages in the present case, 
          since it was not the one that purchased at judicial sale.  The 
          owner has stated that it acquired a leasehold estate by an 
          assignment dated October 16, 1980, and that there were at least two 
          interim conveyances between that time and the December 14, 1976 

          CC 410047 RT

          date of the court-appointed referee's deed conveying a leasehold 
          estate to GIT Industries, Inc.  The earliest lease submitted by the 
          owner was one commencing December 1, 1980.  While GIT Industries 
          might have been able to successfully argue that its lack of rent 
          records did not indicate a willful overcharge, the current owner 
          does not have an equivalent excuse to explain its failure to 
          produce rent records for the period of nearly four years after the 
          judicial sale, until it signed its own vacancy lease with Patricia 
          Tully shortly after acquiring its rights to the subject premises.  
          This is not significantly different from the situation where a new 
          owner fails to require rent records from a seller (and where the 
          price paid may or may not reflect a reduction for potential 
          liability due to inability to prove the lawfulness of rents 
          charged), and where treble damages are imposed due to the 
          presumption of willfulness.  Treble damages are therefore imposed 
          in the present case on overcharges occurring on and after April 1, 
          1984.  The resulting overcharges and penalties are as follows:

               $1,380.72 ($115.06 X 12)      from November 1, 1982 to
                                             October 31, 1983;

               $  615.55 ($123.11 X 5)       from November 1, 1983 to
                                             March 31, 1984;

               $7,017.27 ($123.11 X 19 X 3)  from April 1, 1984 to
                                             October 31, 1985;

               $8,908.56 ($123.73 X 24 X 3)  from November 1, 1985 to
                                             October 31, 1987;

               plus excess security of $123.73 for a total of $18,045.83 as 
               of October 31, 1987.

          As was done in the Commissioner's order of January 10, 1992, the 
          tenant's request for attorneys fees is denied.

          Because of the possibility that the rents charged were not reduced 
          after the Administrator's or the Commissioner's orders, the owner 
          is cautioned to adjust the rent, in leases after those considered 
          by the Administrator, to amounts no greater than that determined by 
          the Administrator's order plus any lawful increases, and to 
          register any adjusted rents with the Administrator's order being 
          given as the reason for the adjustment.

          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, 

          CC 410047 RT

          it is

          ORDERED, that this petition be, and the same hereby is, granted in 
          part and that the District Rent Administrator's order be, and the 
          same hereby is, modified in accordance with this Order and Opinion.  
          The total overcharge, including excess security of $123.73, is 
          $18,045.83 as of October 31, 1987.  The lawful stabilization rent 
          is $348.04 per month in the lease from November 1, 1985 to October 
          31, 1987.               


                                                  JOSEPH A. D'AGOSTA
                                                  Acting Deputy Commissioner

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