DOCKET NUMBERS: SJR 4835; BH 410138-RO etal
                                 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  SJR 4835
     IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
     APPEAL OF                              DOCKET NOS.:B 4410138-RO;
                                         :  CE 430129-RO;DB 410238-RO
     JOSEPH FISCHER (Owner),                DC 410141-RO & DC 410025-RT
     ARTHUR BRANDT (Former Owner)
     & MONICA BERNELL TENANT  PETITIONER :  DRO DOCKET NO.:000059343;
     ------------------------------------X  AE 420002-UC & l 3110495-R 
                                            (CDR 34587)
                                      
                 ORDER AND OPINION REMANDING PROCEEDINGS ON APPEAL

     The abovenamed petitioner, owner, former owner and  tenant,  filed  timely
     Petitions for Administrative Review against  orders  issued  on  July  28,
     1987, April 19, 1988 and  January  31,  1989  by  the  Rent  Administrator
     concerning the housing accommodations known as 47  &  49  Charles  Street,
     Various Apartments, and 253 West 4th Street, Carriage House, Manhattan.

     The owner instituted an Article 78 proceeding based on a  "deemed  denial"
     of petition BH 410138-RO and the matter was remitted by the Court.

     The Commissioner deems it appropriate to consolidate the petitions herein.

     The issues herein are whether the apartments are unregulated because  they
     are each  located  in  a  building  containing  less  than  6  residential
     apartments or are stabilized because they are in  a  "horizontal  multiple
     dwelling" containing at  least  six  de  facto  residential  units  and/or
     because of fraudulent misrepresentations by the former owner to  the  Rent
     Stabilization Association and, if stabilized, whether the  Administrator's
     determination as to rents and overcharges for the carriage house apartment 
     was prior.  Since all the affected tenants took occupancy after  June  30,
     1971, there is not presently any rent control issue.

     Involved herein are 2 adjacent buildings, (47 &49 Charles  Street)  and  a
     converted former carriage house (253 West 4th Street)  located  behind  49
     Charles Street and admittedly an "annex" thereof  which  at  all  relevant
     times have been commonly owned.

     The record, procedurally and factually, is complex and confused  partially
     because  3  proceedings  were  processed  separately  but  resulted  in  3
     interdependent orders.

     In proceeding 000059343 the tenants of Apartment 3 (or third floor) in  47
     Charles Street (Rick Dunnington & Greg Ballweg) filed an objection to  the
     apartment registration, or complaint of non registration, on February  25,
     1986 alleging that they took occupancy in 1975; that the building had 
     always been treated as rent stabilized; that it is a 3 family building but 
     is adjacent to another 3 family building (49 Charles Street) and shares  a
     common heating system.
     On July 28, 1987 the Administrator issued the first of the herein appealed 
     orders finding that the  apartment  is  stabilized  based  on  a  physical
     inspection conducted on June 25, 1987 which showed  that  it  is  part  of
     complies of 3 buildings each containing at least 2  apartments  (which  is






     DOCKET NUMBER: SJR 4835; BH 410138-RO etal
     wrong but not materially so as discussed more fully infra) and which  have
     a common electric system and seven connection (which is questionable  also
     as discussed more fully infra).

     The owner (Joseph Fischer) filed a petition (BH 410138-RO)  alleging  that
     the abovenoted inspection is erroneous and reiterating allegations made in 
     response to the tenants' objection and in proceeding AE 420002-UC.

     In proceeding AE 420002-UC the owner (Joseph  Fischer)  on  May  21,  1986
     filed applications for determinations that the 3 premises were exempt from 
     stabilization (RS-3 forms) alleging that each building contains less  than
     6 apartments and that, if they ever were subject to stabilization, it  was
     only because of fraudulent applications by the prior owner (Arthur Brandt) 
     for  J-51  tax  benefits,  and  a  false  registration   with   the   Rent
     Stabilization Association in connection  therewith,  which  J-51  benefits
     were granted but subsequently revoked ab initio.

     On April 19, 1988 the Administrator  issued  the  second  herein  appealed
     order finding that the 2nd and 3rd floor apartments in 47  Charles  Street
     were stabilized  based  on  the  findings  in  000059343  abovenoted.   No
     separate findings were made as to  49  Charles  Street  or  253  West  4th
     Street.

     The Commissioner notes that in this proceeding 2 physical inspections were 
     made on April 14 and 29, 1987 by another inspector the combined report  of
     which recites that 47 and 49 Charles Street each contain 1 commercial  and
     2 residential apartments and  that  each  building  has  its  own  heating
     system,  water  and  sewer  connections,  electric  and  gas  meters   and
     basements.

     The owner (Joseph Fischer) filed another petition (CE 430129-RO) referring 
     to his prior petition and substantially reiterating his prior allegations.

     In proceeding L 3110495-R the tenant of the carriage  house  apartment  in
     253 West 4th Street (Monica Bennell) had filed a complaint  of  overcharge
     on March 6, 1984 alleging that she had taken occupancy on April 15,  19790
     pursuant to a 2 year lease with one  P.J.  Feldstein  "as  agent  for  the
     landlord" at a rent of $650.00.  No rental history was submitted.

     On January 31, 1989 the Administrator issued the 3rd herein appealed order 
     which found the apartment stabilized pursuant to the determination  in  AE
     420002-UC.  The order further established an initial rent of $545.00 which 
     was found to be the last rent paid by the prior tenant (William  Atherton)
     and  found  total  overcharges  of  $10,213.73   including   interest   on
     overcharges after April 1, 1984.  The order characterized  P.J.  Feldstein
     as "Agent/Net lessor" of Arther Brandt.

     The Administrator also permitted a 10% equity increase under Guideline  15
     pursuant to Section 35A of the former  Code  because  there  had  been  no
     renewal leases since 1984, the landlord attempting to evict the tenant  as
     unregulated.

     The owner (Joseph Fischer) filed a petition (DB  410238-RO)  incorporating
     his prior petitions by reference and urging  that  there  was  no  legally
     sufficient proof as to the rent of the abovenoted prior tenant.

     The Commissioner notes (as discussed more fully infra)  that  Mr.  Fischer
     did not collect any rent from Ms. Bernell.







     DOCKET NUMBER: SJR 4835; BH 410138-RO etal
     The former owner (Arthur Brandt) also  filed  a  petition  (DC  410141-RO)
     complaining that overcharges were not  apportioned  between  him  and  the
     abovenoted P.J. Feldstein who was the net leasee of the building  and  who
     was not made a party to this proceeding and  that  neither  of  them  were
     served and afforded opportunities to be heard in AE 420002-UC.

     The tenant (Monica Bernell) also filed a petition  (DC  410025-RT)  urging
     there was no basis for the abovenoted Section 35A adjustment since she had 
     never been offered additional renewal  leases  despite  demands  therefor;
     that treble damages and attorney's fees should have been imposed and  that
     Arthur Brandt should be liable for all overcharges.

     With respect  to  the  physical  arrangement  of  the  premises,  separate
     Certificates of Occupancy were issued for 47  and  49  Charles  Street  in
     January 1972 (apparently based on alterations rather than new construction 
     reciting the legal occupancy of each building as  an  ordinary  cellar,  a
     restaurant in the basement (or ground floor), a  doctor's  office  on  the
     first floor and one residential apartment each on the 2nd and 3rd  floors.
     253 West 4th Street, as abovenoted, is an "annex" of 49 Charles Street and 
     contains one residential apartment.  Thus, aside from the restaurants  (or
     restaurant), there are in the 3 buildings a total of  2  commercial  units
     and 5 residential apartments.

     The owner alleges that the basements (or groundfloors) are  "consolidated"
     to accommodate one restaurant occupying both buildings.

     The owner further alleges that the buildings  are  otherwise  occupied  in
     accordance with their Certificate of Occupancy except that the first floor 
     commercial unit in 47 Charles Street is rented as an art gallery  under  a
     commercial lease but may have been sublet to others who may also be  using
     it for residential purposes and, if so, the  owner  intends  to  institute
     eviction proceedings.

     Tenant Dunnington alleged that the  commercial  apartment  in  47  Charles
     Street had always been used for residential purposes.  47 and  49  Charles
     Street were originally on 2 separate tax lots which were merged  into  one
     in 1968 at the request of the City Register apparently for convenience  in
     sending out tax bills the buildings being commonly owned.

     Arthur Brandt took title to the 3 buildings in March 1968 and  net  leased
     them (along with other buildings) to P.J. Feldstein in January 1974.

     Arthur Brandt in December 1977 filed applications with the City Department 
     of Housing Preservation and Development (HPD) for  the  subject  buildings
     (among others) for J-51 tax benefits.

     In January 1978 (allegedly to facilitate said  applications  according  to
     Joseph Fischer)  Arthur  Brandt  enrolled  the  buildings  with  the  Rent

     Stabilization Association as containing 7  apartments  to  be  subject  to
     stabilization which enrollment was accepted in February 1978.

     In March 1978 HPD granted J-51 benefits.

     In May 1982 Arthur Brandt sold the buildings (among  others)  to  a  third
     party receiving as part of the transaction a 21 year net lease of 253 West 
     4th Street subordinated to the tenancy of Ms Bernell but entitling him  to
     collect the rent from Ms Bernell.







     DOCKET NUMBER: SJR 4835; BH 410138-RO etal
     In 1983 and 1984 Arthur Brandt was indicted  and  convicted  of  fraud  in
     connection with the abovenoted J-51 applications  and  the  J-51  benefits
     were revoked ab initio.

     In October 1985 Joseph Fischer bought the buildings  from  the  abovenoted
     third party.

     In January 1986 Arthur Brandt entered into  a  Stipulation  of  Settlement
     with the City acquiescing in the  revocation  of  the  J-51  benefits  and
     agreeing to pay back taxes with penalties and interest.

     The Commissioner is of the opinion that the proceedings must  be  remanded
     for further processing.

     The buildings together contain 5 legal residential apartments and 2  legal
     commercial apartments (in addition to a restaurant).  If, at all  relevant
     times, they were occupied strictly according to their legal status  it  is
     arguable that they are not subject to stabilization and it  is  immaterial
     whether they are also a horizontal multiple dwelling.

     However, the de facto as well as the de jure  usage  of  the  premises  is
     relevant in determining regulatory status.  At least one of the commercial 
     apartments is admittedly capable of being, and allegedly has been and  may
     still be, used for residential occupancy.

     As abovenoted, the prior owner, who presumably knew the  then  status  and
     usage of th premises, enrolled the premises with  the  Rent  Stabilization
     Association  as  containing  7  apartments  and  there  are,  in  fact,  7
     potentially stabilized apartments.  In remand the facts  and  circumstance
     surrounding the enrollment should be investigated.

     If it should be found that there are are ore were more than  5  apartments
     being used for residential purposes, the issue of  a  horizontal  multiple
     dwelling becomes material.

     As abovenoted, there are 2 substantially contradictory inspection  reports
     in the record which should be reevaluated, by  a  further  inspection,  if
     necessary, as discussed infra.

     The Commissioner notes that consideration should be given not only to what 
     common elements exist (or do not exist) presently but  also  on  the  base
     dates and when the tenants took occupancy.





     If the apartments are found subject to stabilization it  is  necessary  to
     determine rents for Dunnington and Ballweg.  In  that  case  consideration
     should be given, to apportionment of overcharges as discussed  more  fully
     infra.

     If the carriage house is subject to stabilization,  in  view  of  all  the
     foregoing, the Administrator should also reconsider the questions  of  the
     equity  adjustment  and  treble  damages   and   attorney's   fees.    The
     relationship between Brandt and Feldstein (whether strictly net  leasor  -
     lease or also principal agent) should be clarified  and,  if  appropriate,
     overcharges apportioned.







     DOCKET NUMBER: SJR 4835; BH 410138-RO etal
     On remand the Administrator  should  explore  the  foregoing  by  whatever
     means are  found  appropriate,  including  additional  inspections  (which
     should encompass the actual usage of all apartments)  and/or  hearings  if
     necessary, on notice  to  all  parties  including  all  prior  owners  and
     managing agents and present tenants.  Care should  be  taken  as  to  what
     elements are consolidated or processed separately and the parties  clearly
     advised thereof.

     THEREFORE, pursuant to the Rent Stabilization Law and Code, it is

     ORDERED, that these petitions be, and the same hereby are, granted to  the
     extent of remanding the proceedings to the Rent Administrator for  further
     processing in accord herewith.   The  orders  of  the  Rent  Administrator
     remain in full force and effect except that  any  overcharges  are  stayed
     until new orders are issued on remand.

     ISSUED:



                                                                              
                                                      ELLIOT SANDER
                                                    Deputy Commissioner
    

TenantNet Home | TenantNet Forum | New York Tenant Information
DHCR Information | DHCR Decisions | Housing Court Decisions | New York Rent Laws
Disclaimer | Privacy Policy | Contact Us

Subscribe to our Mailing List!
Your Email      Full Name