CD 210147 RO

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

          APPEAL OF                              DOCKET NO. CD 210147 RO
                                              :  DRO DOCKET NO.K-3106207-R
               BAY REALTY ASSOCIATES             TENANT: CARL F. SMITH

                                PETITIONER    : 

               On April 8, 1988, the above-named petitioner-owner filed a 
          Petition for Administrative Review against an order issued on March 
          14, 1988, by the Rent Administrator, 10 Columbus Circle, New York, 
          New York, concerning the housing accommodations known as 2678 Ocean 
          Avenue, Brooklyn, New York, Apartment No. 1M, 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 which 
          the tenant stated that he first moved to the subject apartment on 
          June 1, 1977 at a rental of $285.00 per month.

          In answer to the tenant's complaint, the owner advised that 
          it was a new owner of the subject premises and could not supply a 
          rental history prior to June 1, 1977.  The owner submitted a 
          rental history from June 1, 1977.

          In Order Number CDR 32,924, 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 $3432.17 
          from June 1, 1977 through May 31, 1985, including interest on the 
          overcharge occurring on and after April 1, 1984.  The Rent 
          Administrator further determined that the subject premises had not 
          been properly registered and that the owner could not obtain 
          vacancy and / or renewal lease increases until the subject 
          premises was properly registered.

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          In this petition, the owner alleges in substance that it did 
          register the subject premises as required; that assuming any rent 
          overcharge is found, the owner is not liable for any overcharge 
          refunds prior to January 6, 1983 - the date it purchased the 
          subject premises; and that it has been unable to obtain any rent 
          records from the previous owner prior to 1977.  In support of its 
          contentions, the owner submitted proof of registration of the 
          subject premises and a copy of the deed showing it purchased the 
          subject premises on January 6, 1983.

          In response to the owner's petition, the tenant stated in 
          substance that the owner's objections are without merit, but that 
          he is prepared to forego the claim for rent overcharge refunds for 
          the period prior to January 6, 1983 from the current owner.

          The Commissioner is of the opinion that this petition should 
          be granted in part.

          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. 

          CD 210147 RO
          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, 

          In this case, an examination of the rental history from April 
          1, 1980, discloses that the April 1, 1980 rent was $309.23 plus a 
          temporary fuel surcharge of 1/2% making the April 1, 1980 lawful 
          stabilization $310.65 (pursuant to a three year renewal lease 
          effective June 1, 1979 to May 31, 1982 under Guideline 10).  The 
          lawful stabilization rent was then increased to $358.71 pursuant 
          to a Guideline 13 rent increase of 13% over $309.23 effective 
          June 1, 1982 to May 31, 1985 for a three year renewal lease.   
          However, the prior owner and current owner incorrectly charged 
          $360.35 rather than $358.71 during this period since they 
          continued to charge the 1/2% temporary fuel surcharge although 
          such surcharge had terminated effective May 31, 1982.  Due to the 
          aforementioned factor, a total overcharge of $61.83 occurred from 
          June 1, 1982 through May 31, 1985 including interest on that 
          portion of the overcharge occurring on and after April 1, 1984 and 
          excess security.

          Pursuant to Section 2526.1 of the Rent Stabilization Code, 
          the Commissioner has apportioned the overcharge between the owner 
          herein and the prior owner.  The current owner is responsible for 
          a total overcharge of $48.71 - collected from February 1, 1983 

          through May 31, 1985 - including interest on that portion of the 
          overcharge occurring on and after April 1, 1984 and excess 
          security.  The lawful stabilization rents for the subject 
          apartment are as follows:  $310.65 effective June 1, 1979 and 
          $358.71 effective June 1, 1982.  The prior owner is responsible 
          for a total overcharge of $13.12 - collected from June 1, 1982 

          CD 210147 RO
          through January 31, 1983.  The Commissioner notes that the prior 
          owner was not served with a copy of the tenant's complaint nor 
          listed in the Rent Administrator's order.  This order is issued 
          without prejudice to the tenant's rights, if any, to proceed 
          against the prior owner in a court of competent jurisdiction.

          An examination of the records for the subject premises 
          discloses that the owner is correct in its contentions that the 
          subject premises was properly registered during the years from 
          1984-1991.  Accordingly, the Rent Administrator's determination 
          that the subject premises was not properly registered and that 
          therefore the owner was not eligible for renewal and/ or 
          guideline increases is revoked.

          Because this determination concerns lawful rents only through 
          May 31, 1985, the owner is cautioned to adjust subsequent rents 
          to an amount no greater than that determined by this order plus 
          any lawful increases and to register any adjusted rents with this 
          order and opinion being given as the explanation for the 

          If the owner has already complied with the Rent 
          Administrator's order and there are arrears due to the owner as a 
          result of the instant determination, the tenant shall be permitted 
          to pay off the arrears in twenty four equal monthly installments.  
          Should the tenant vacate after the issuance of this order or have 
          already vacated, said arrears shall be payable immediately.

          THEREFORE, in accordance with the Appellate Division ruling 
          in JRD, it is

          ORDERED, that this petition for administrative review be, and 
          the same hereby is, granted in part, and, that the order of the 
          Rent Administrator be, and the same hereby is, modified in 
          accordance with this order and opinion.  The amount of the rent 
          overcharge owed by the current owner from February 1, 1983 through 
          May 31, 1985 is $48.71.


                                          ELLIOT SANDER
                                          Deputy Commissioner


          CD 210147 RO


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