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
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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 :
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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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