CD510130R0
                                    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 S.J.R. 6650
          IN THE MATTER OF THE ADMINISTRATIVE   ADMINISTRATIVE REVIEW
          APPEAL OF                             DOCKET NO.: CD510130RO

                                                DRO DOCKET NO.: ZBL410001R
                 RAPHAEL SCHNEIDERMAN,
                                                TENANTS: GEORGE AND LAURA     
                                                            HOLLANDER
                                   PETITIONER    
          ------------------------------------X                             

             ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW


          On April 13, 1988, the above-named petitioner-owner timely re-filed 
          a Petition for Administrative Review against an order issued on 
          February 16, 1988, by the Rent Administrator, 10 Columbus Circle 
          New York New York, concerning the housing accommodations known as  
          340 West 22nd Street, New York, New York, Apartment No. 2R AKA 2B, 
          wherein the Rent Administrator determined that the owner had 
          overcharged the tenant.

          Subsequent thereto, the petitioner-tenant filed a petition in the 
          Supreme Court pursuant to Article 78 of the Civil Practice Law and 
          Rules, in the nature of mandamus, for a judgment directing the 
          Division to render a determination of the petitioner-owner's 
          administrative appeal.

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

          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 of a rent 
          overcharge complaint by the tenants in December 1987. 

          The tenants who took occupancy of the subject apartment in 
          September 1975 contend that the initial apartment registration 
          (hereafter RR1) was never served on them and that the apartment is 
          not properly registered with the Division of Housing and Community 
          Renewal (DHCR) because the owner, who recently combined 3 
          apartments into a single unit thereby reducing the 6 unit multiple 
          dwelling into a 3 unit multiple dwelling, alleges that the building 
          is no longer subject to Rent Stabilization.

          The owner was served with a copy of the tenants' complaint but 
          failed to interpose a response.







          CD510130R0


          Prior to the order appealed herein, the Rent Administrator had 
          issued order ZAI410017RV on December 28, 1987 wherein it was 
          determined that the tenants were entitled to a renewal lease; that 
          the building was subject to the Rent Stabilization Law (hereafter 
          RSL) and that failure to properly register the subject building may 
          bar an owner from applying for or collecting any rent increases 
          pursuant to Section 2528.4 of the RSC.

          In Order Number ZBL410001R, the Rent Administrator established the 
          lawful stabilized rent as $438.38 effective April 1, 1984, 
          determined that the tenants had been overcharged and directed a 
          refund to the tenants of $4,725.55 including interest on 
          overcharges collected on and after April 1, 1984.

          In addition, the rent was frozen at $438.38 until the apartment is 
          properly registered with DHCR and a copy of the RR1 forms are 
          served by certified mail on the complainants and all other Rent 
          Stabilized tenants in the building.

          In this petition, the owner contends in substance that it had 
          purchased the subject building in 1984 and believed that the prior 
          owner had both properly registered the building and served the 
          tenants with the required RR1; that the instant complaint only 
          arose because the owner had originally wished to use the subject 
          apartment for his own use but subsequently abandoned any attempt to 
          acquire the subject apartment because another apartment became 
          vacant; that the owner has attempted and is continuing to make 
          efforts to obtain an affidavit from the prior owner concerning the 
          service of the RR1 on the complainants; that proof of proper 
          registration would render the tenants' complaint untimely and that 
          it is unfair to penalize the current owner for an alleged failure 
          of his predecessor.


          In answer to the owner's petition, the tenants stated in substance 
          that upon receipt of the owner's claim on their apartment they did 
          start to investigate their rights and found that DHCR had no record 
          of registration for the subject building on file; that the owner 
          never rented the other vacant apartment immediately but did combine 
          3 apartments into one and that they are the last rent stabilized 
          tenants in the building.

          The Commissioner is of the opinion that this petition should be 
          denied.

          Sections 2528.2 and 2528.3 of the RSC outline the owner's 
          obligations under the Omnibus Housing Act to register subject 
          housing accommodations with DHCR.

          Section 2528.4(a) of the RSC provides, in pertinent part, that the 
          penalty for failure to completely and timely register an apartment 
          will be that the owner will be barred from collecting any rent in 
          excess of the legal regulated rent in effect on the date the 
          housing accommodation became subject to the registration 
          requirements and that the late filing of the registration shall 
          result in the elimination prospectively of such penalty.



          CD510130R0

          Full compliance with these registration requirements involves both 
          the filing of initial registrations with DHCR and the service of 
          such initial registration on the tenant in occupancy on April 1, 
          1984 or on the date the apartment first becomes subject to the 
          registration requirements.

          An examination of DHCR records in this case discloses that the 
          subject building and apartment were not registered for the years 
          1980 and 1988 until January 6, 1989 and January 12, 1989, 
          respectively (There is no record of the actual date that the 1984 
          and 1985 registrations were filed with DHCR); that no 
          substantiation that a RR1 was actually served on the complainants 
          was submitted either below or on appeal; that the owner failed to 
          file a discrete petition against the Rent Administrator's previous 
          order ZAI410017RV wherein it was established that the apartment and 
          building were subject to the Rent Stabilization Law and the owner 
          was advised of the penalties for failure to comply with the 
          registration requirements of Section 2528.4 and although served by 
          the Rent Administrator during the proceeding below the owner failed 
          to interpose a response.

          Therefore, the Rent Administrator correctly applied the provisions 
          of Sections 2528.2, 2528.3 and 2528.4 of the RSC by calculating the 
          rent from the base date of April 1, 1980 and freezing the rent at 
          $438.38 effective April 1, 1984 due to the owner's failure to 
          evince proper and complete registration of the subject apartment by 
          service of the RR1 on the tenants in occupancy on April 1, 1984. 
          Although on pg. 3 of the order a typographical error lists the rent 
          of $520.84 frozen effective November 1, 1981, both the calculations 
          on pg. 2  and in the calculation chart indicate that the correct 
          frozen rent is $438.38 and the correct effective date is April 1, 
          1984 pursuant to Section 2528.4(a) of the Code.  This typographical 
          error is hereby corrected.

          With regard to the current owner's contention that the current 
          owner should not be held liable for overcharges caused by a prior 
          owner, Section 2526.1(f) of the Rent Stabilization Code provides in 
          pertinent part 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.

          The Commissioner rejects as without merit the owner's contention 
          that its liability is limited due to the fact that it should not be 
          penalized for alleged failures of the prior owner and for records 
          not provided at title transfer. 

          It is a long standing DHCR policy that a new owner "steps into the 
          shoes" of the prior owner.  Upon purchasing a rent regulated 
          property, the new owner knew or should have known of its obligation 
          to acquire a complete set of rental records in order to verify that 
          the rents contained in the building's rent roll included with the 
          transfer of title were legal regulated rents and that registration 
          requirements were complied with.  Its failure to do so is 
          insufficient evidence to absolve the current owners from liability.

          Accordingly, the Rent Administrator's order was warranted.








          CD510130R0

          Because this determination concerns lawful rents only through 
          February 29, 1988, 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 
          increase.

          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 provisions of 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, affirmed.



          ISSUED



                                                                           
                                          JOSEPH A. D'AGOSTA
                                          Deputy Commissioner


    

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