CD 210147 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. CD 210147 RO
: DRO DOCKET NO.K-3106207-R
BAY REALTY ASSOCIATES TENANT: CARL F. SMITH
PETITIONER :
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW IN PART
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,
1980.
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
adjustment.
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.
ISSUED
ELLIOT SANDER
Deputy Commissioner
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