CD110173RO

                                  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

          ------------------------------------X 
          IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
          APPEAL OF                              DOCKET NO.CD110173RO
                                              :  DRO DOCKET NO.Q3119490R
               KULAZIZ ASSOCIATES                TENANT: W. FIGUEROA          


                                PETITIONER    : 
          ------------------------------------X                             
             ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW


               On April 14, 1988, the above-named petitioner-owner filed a 
          Petition for Administrative Review against an order issued on March 
          11, 1988, by the Rent Administrator, 10 Columbus Circle, New York, 
          New York, concerning the housing accommodations known as 64-62 Booth 
          Street, Queens, New York, Apartment No. 1-D, wherein the Rent 
          Administrator determined that the owner had overcharged the tenant.

               The Administrative Appeal is being determined pursuant to the 
          provisions of Section 2526.1 of the Rent Stabilization Code.

               The issue herein is whether the Rent Administrator's order was 
          warranted.

               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 in 
          March, 1984,  of a rent overcharge complaint by the tenant.  In such 
          complaint, the tenant stated that he had first moved to the subject 
          apartment on September 1, 1983, at a rental of $450.00 per month.

               The owner was served with a copy of the tenant's complaint and 
          directed to submit a complete rental history for the subject 
          apartment and informed that it was subject to treble damages on rent 
          overcharges collected on and after April 1, 1984.

               In answer to the tenant's complaint, the owner stated in 
          substance that it had first purchased the subject premises on 
          December 28, 1984, and could not provide a rental history prior to 
          December 1, 1984.

               In Order Number CDR 32,884, the Rent Administrator determined 
          that due to the owner's failure to submit a complete rental history, 
          the tenant had been overcharged in the amount of $29,703.19
          including treble damages on the overcharge occurring on and after 
          April 1, 1984 and directed the owner to refund such overcharge to 
          the tenant as well as to reduce the rent.  It was also determined in 









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          the order that the owner herein was only responsible for overcharges 
          occurring from April 1, 1984 onwards, but the order did not state 
          the specific amount of overcharge owed by said owner.

               In this petition, the owner states " the order is arbitrary, 
          capricious and contrary to law both in its manner of processing and 
          issuance and in its content and effect.  In addition, treble damages 
          should not have been assessed."

               In answer to the owner's petition, the tenant stated in 
          substance that the Rent Administrator's order was warranted.

               The Commissioner is of the opinion that this petition should be 
          denied and the Rent Administrator's order modified.
               
               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) and to produce such records to the 
          DHCR upon demand.

               Section 26-516 of the 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 to 
          produce rent records for more than four (4) years prior to the most 
          recent registration, and concomitantly, established a four 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 rights 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 four years prior to April 1, 1984 of the 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. Mgmt. 
          v. Eimicke, 148 A.D.2d 610. 539 N.Y.S. 2d 667 (App. Div. 2d Dept., 






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          1989). motion for leave to reargue or for leave to appeal to the 
          Court of Appeals denied ( App. Div. 2d Dept., 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 four 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 Dept. 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.  However, the 
          owner herein did not submit a rental history from April 1, 1980, 
          although afforded an opportunity to do so.  Therefore, the Rent 
          Administrator properly used DHCR default procedures to establish the 
          rent.

               Section 2526.1(f) of the 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 overcharge, in the absence of collusion or any relationship 
          between such owner and any prior owners; and 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 collected by any prior owner.

               In the instant case, the Rent Administrator failed to actually 
          apportion overcharges pursuant to Section 2526.1(f).  To clarify 
          matters for the parties, the following apportionment is made:  The 
          prior owner Man Bun Chu/ Kuang Shu is individually responsible for 
          overcharges collected from September 1, 1983 until April 1, 1984 or 
          $1,408.40; the prior owner and the owner herein Kulaziz Associates 
          /Azizuddin Aziz are jointly and severally liable for overcharges 
          collected between April 1, 1984 until January 1, 1985 (the first 
          rent payment date following transfer of ownership) inclusive of 
          treble damages or $5,611.47; and the owner herein is individually 
          responsible for overcharges collected between January 1, 1985 until 
          February 29, 1988 inclusive of treble damages and excess security or 
          $22,683.32.  This order is issued without prejudice to any action 




          the current owner may have against any prior owner for the refund of 
          any overcharge paid by the current owner to the tenant which the 







          CD110173RO

          prior owner may have collected.

               With regard to the owner's contention that the imposition of 
          treble damages was not warranted, Section 2526.1 of the Rent 
          Stabilization Code provides in pertinent part that any owner who is 
          found by the DHCR to have collected a rent or other consideration in 
          excess of the legal regulated rent on and after April 1, 1984 shall 
          be ordered to pay to the tenant a penalty equal to three times the 
          amount of such excess.  If the owner establishes by a preponderance 
          of the evidence that the overcharge was not willful, the DHCR shall 
          establish the penalty as the amount of the overcharge plus interest 
          from the date of the first overcharge on or after April 1, 1984. 

               In the instant case, the owner has not established that the 
          overcharge was not willful.  It is noted that the owner is 
          responsible for obtaining a complete rental history from the prior 
          owner and the failure to do so does not establish that the resulting 
          overcharge was not willful.

               The owner is directed to reflect the findings and 
          determinations made in this order on all future registration 
          statements, including those for the current year if not already 
          filed, citing this order as the basis for the change.  Registration 
          statements already on file, however, should not be amended to 
          reflect the findings and determinations made in this order.  The 
          owner is further directed to adjust subsequent rents to an amount no 
          greater than that determined by this order plus any lawful 
          increases.

               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 or not in excess of twenty percent per month thereof 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 for administrative review be, and 
          the same hereby is, denied, and, that the order of the Rent 
          Administrator be, and the same hereby is, modified in accordance 
          with this order and opinion.         .

          ISSUED



                                                                        
                                          JOSEPH A. D'AGOSTA
                                          Deputy Commissioner



                     






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