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.CD110173RO
: DRO DOCKET NO.Q3119490R
KULAZIZ ASSOCIATES TENANT: W. FIGUEROA
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
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
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.,
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
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
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
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. .
JOSEPH A. D'AGOSTA