ADM. REVIEW DOCKET NO.: CF 210134-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

          ------------------------------------X 
          IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
          APPEAL OF                               DOCKET  NO.  CF  210134-RO
                                                       
                                              :    D.R.O.    DOCKET    NOS.:
                                                 K-3105346-RT  
                                                 CDR 33352 
            ARTHUR  WEINER,                        TENANTS:  OLGA   &   JOHN
                                                          PIZZUTIELLO 
                         
                                 PETITIONER   :  
          ------------------------------------X 

            ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW


               On June 9, 1988 the  above  named  petitioner-owner  filed  a
          Petition for Administrative Review against an order issued on  May
          12, 1988 by the District Rent Administrator, 10  Columbus  Circle,
          New York, New York  concerning  housing  accommodations  known  as
          Apartment 5C at 877 Bay Ridge Avenue, Brooklyn, New  York  wherein
          the District Rent Administrator  determined  that  the  owner  had
          overcharged the tenants. 

               The issue  in  this  appeal  is  whether  the  District  Rent
          Administrator's order was warranted.

               The applicable sections of the Law are Section 26-516 of  the
          Rent  Stabilization  Law  and  Section  2526.1(a)  of   the   Rent
          Stabilization Code.

               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  tenants,  in
          which they stated that they had commenced occupancy on October  1,
          1981 at a rent of $365.00 per month. 

               The owner was served with a copy of  the  complaint  and  was
          requested to submit rent records to prove the  lawfulness  of  the
          rent being  charged.   In  answer  to  the  complaint,  the  owner
          submitted leases only from 1978, claiming to have not  been  given
          any leases when it acquired the subject building in that year.  On
          September 26, 1986 the owner was sent a Final Notice of Pending 




          Default, stating the procedure that would  be  used  to  calculate
          the default rent if  the  owner  did  not  submit  a  full  rental






          ADM. REVIEW DOCKET NO.: CF 210134-RO
          history.  In answer, the owner submitted only the same  leases  as
          before.

               In an  order  issued  on  May  12,  1988  the  District  Rent
          Administrator established  a  default  rent  due  to  the  owner's
          failure to submit a complete rental  history,  and  determined  an
          overcharge of $4,153.97 as of September 30, 1985.

               In this petition, the owner contends in substance that it was 
          unable to obtain prior leases when it bought the subject  premises
          in 1978, despite several conversations with  an  employee  in  the
          office of the former owner; that in any event  all  of  the  prior
          owner's rent records relating to the building  were  destroyed  on
          January 22, 1987 [10 days after the owner's second  submission  of
          leases only from 1978] by water damage from a fire  on  the  floor
          above; and that the lawful rent should be  based  on  the  records
          which were submitted.

               In answer, the tenants assert in  substance  that  the  owner
          should have obtained the prior leases when buying the building, or 
          should have later compelled the production of records; that  water
          damage at the office of the prior owner on January 22,  1987  does
          not matter since the owner had more than  two  years  between  the
          time of being informed of the tenants' complaint and the  time  of
          the alleged water damage to  obtain  the  records;  and  that  the
          owner's petition should be dismissed.   

               In a supplement  to  its  petition,  the  owner  contends  in
          substance that a recent court decision requires it to produce rent 
          records only from 1980, and that  there  has  been  no  overcharge
          since that date.

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

               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)  to  date  and  to
          produce such records to the DHCR upon demand.

               Section 26-516 of 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
          produce rent records for  more  than  4  year  limitation  on  the
          calculation of rent overcharges.

               It had 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






          ADM. REVIEW DOCKET NO.: CF 210134-RO
          (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  right  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 4 years prior to April 1, 1984  of  their  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)  in  cases  involving  rent
          overcharge complaints filed prior to April 1, 1984.    

               However, it has recently been held  in  the  case  of  J.R.D.
          Mgt. v. Eimicke, 148 A.D.2d 610, 539 N.Y.S.2d 667  (App.  Div.  2d
          Dep't 1989), motion for leave to reargue or for  leave  to  appeal
          to the Court of Appeals denied  (App.  Div.  2d  Dep't,  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 4 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  Dep't  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  present  case  the  subject  dwelling  unit  is
          located in the Second  Department,  the  DHCR  is  constrained  to
          follow the JRD decision in  determining  the  tenants'  overcharge
          complaint, limiting the requirement for rent records to  April  1,
          1980.  The record contains a lease in existence on that date for a 
          rent of $245.00, which is  therefore  the  base  date  rent.   The
          subsequent lawful stabilization rents are $286.65 ($245.00 +  17%)
          per month in the lease from July 1, 1981 to June 30, 1984; $365.00 
          ($286.65 + 28%) per month in the lease from October 1, 1981 to 





          September 30, 1983; and $390.55 ($365.00 + 7%) in the  lease  from
          October 1, 1983 to September 30, 1985.  Since these are the actual 
          rents charged, there has been no overcharge as  of  September  30,
          1985, and the Administrator's order finding that  there  was  must
          therefore be revoked. 

               If the owner has already complied  with  the  Administrator's
          order and there are arrears due to the owner as a  result  of  the






          ADM. REVIEW DOCKET NO.: CF 210134-RO
          present determination, the owner is directed to allow the  tenants
          to pay off the  arrears  in  twelve  equal  monthly  installments.
          Should the tenants vacate after the issuance  of  this  order,  or
          have  previously  vacated,   said   arrears   shall   be   payable
          immediately.                     

               THEREFORE, in accordance with the Rent Stabilization Law  and
          Code, it is

               ORDERED, that this petition  be,  and  the  same  hereby  is,
          granted and that the District Rent Administrator's order  be,  and
          the same hereby is, revoked since there was no rent overcharge. 

          ISSUED:






                                                                        
                                          ELLIOT SANDER
                                          Deputy Commissioner



                                          






























    

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