CK 410045-RT
                                  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.:   
                                                  CK 410045-RT             
              FRANK LOHR & ROGER PAFFITT,         RENT ADMINISTRATOR'S
                                                  DOCKET NO.: L-3114383
                                                  ORDER NO.:  CDR 22796 As
                           TENANT-PETITIONERS,                Amended
          ------------------------------------x   OWNER: BRITTON REALTY CO.


            ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW  
                  IN PART AND MODIFYING RENT ADMINISTRATOR'S ORDER


          On November 9, 1988, the above-named petitioners filed a Petition 
          for Administrative Review against an order issued on October  27,
          1988, by the Rent Administrator, 10 Columbus  Circle,  New  York,
          New York  concerning  the  housing  accommodation,  known  as  95
          Christopher Street, New York, New York,  Apartment  16-B  wherein
          the Administrator amended an order which was issued on April  29,
          1988.

          The Commissioner has reviewed all of the evidence in  the  record
          and has carefully considered that portion of the record  relevant
          to the issues raised in the administrative appeal.

          This proceeding was commenced on March 2, 1984 when  the  tenants
          filed a complaint of general overcharge, alleging that the  owner
          had failed to provide a rental history for the subject apartment. 
          The tenants stated they had commenced occupancy on July 22, 1983
          pursuant to a lease assignment.

          A copy of the complaint was sent to the owner.

          In response, the owner submitted a rental history from  the  base
          date, including copies of leases, the assignment  agreement,  the
          Landlord's Report of Statutory Decontrol, Major Capit l  Improve-
          ment (MCI) rent  increase  orders,  and  invoices  and  cancelled
          checks for the installation of  new  appliances  and  air  condi-
          tioners.


          On October 27, 1988, the  Administrator  issued  the  order  here
          under review, amending and superseding an order issued  on  April
          29, 1988, which itself amended an order dated November  5,  1986.
          In the order as amended, the  Administrator  determined  that  an
          overcharge had occurred and directed the owner to refund a  total
          of $17.07 inclusive  of  excess  security  and  interest  on  the
          overcharge occurring on or after April 1, 1984.

          In the appeal, the petitioners request modification of the  order







          CK 410045-RT
          to determine a greater overcharge and to  award  treble  damages.
          The tenants cite two errors in the order:

               1.   in the explanation of the rent increase on May 1, 
                    1977, there is a discrepancy between the Guide- 
                    lines number and the percentage increase allowed; 
                    and 

               2.   because the previous rent increase had been 
                    effective on May 1, 1977, a rent increase should 
                    not have been permitted on August 1, 1977, only 
                    three months later.

          In reply, the owner contends that the tenants are mistaken as  to
          the correct Guidelines number and  percentage  of  rent  increase
          applicable during the pertinent time period.   The  owner  states
          that despite a typographical error which did not affect the  cal-
          culation, the DHCR calculated the rent correctly.

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

          The Commissioner finds there is an error in  the  explanation  of
          the May 1, 1977 rent increase.  Section 20A(4) of the former Rent 
          Stabilization Code precludes the owner from increasing  the  rent
          charged in the initial stabilized lease for a period of one  year
          or until the expiration of the initial stabilized  lease,  which-
          ever is later.  This  provision  applies  specifically  "...  for
          those dwelling units which were subject to the Rent Stabilization 
          Law as a result of the vacancy, ..." and it estops an owner  from
          effectuating an otherwise allowable rent increase.  As  noted  in
          the rent calculation chart, the initial lease would have  termin-
          ated on April 30,  1977.   Therefore,  the  stabilized  rent  was
          frozen until May 1, 1977.  At that time, the applicable Guideline 
          was Guideline No. 8 and the appropriate rent increase was at 
          the rates for a one-year vacancy lease.   Although  the  Adminis-
          trator erred in its explanatory portion of the calculations 



          employed for the May 1, 1977 rent increase, the error was not 
          material in the determination of the lawful rent.  Although  cor-
          rected by the Commissioner in  the  chart  annexed  hereto,  this
          error was only typographical in effect. 

          Nevertheless, the tenants'  petition  must  be  granted  in  part
          because Division policy dictates that a lease rent in effect  for
          three months or less cannot be used to support a  rent  increase.
          (Accord: Administrative Review Order No.  K  410186-RO).   There-
          fore, the $525.00 Avigdor rent, which was in effect from  May  1,
          1977 to July 31, 1977 could not be the base used to  compute  the
          August 1, 1977 initial London and Samaniego  rent.   Accordingly,
          the immediately prior Avigdor rent of $465.00  should  have  been
          used.

          The three month rule is usually used at the beginning of a  lease
          term where allegedly there have been succesive  vacancies  within
          a short period of time and it would  be  difficult  to  determine







          CK 410045-RT
          whether there actually had been the vacancies alleged.   Its  use
          here at the end of a lease term is technically correct;  however,
          because of its interaction with code Section 20A(4),  its  appli-
          cation herein produces a particularly harsh result.  Here,  there
          is no question of the vacancy.  But for Section 20A(4) the  owner
          would have been entitled to a vacancy increase at  the  beginning
          of the Avigdor tenancy.  Accordingly, with due  consideration  of
          all factors bearing upon the equities involved, pursuant to  Code
          Section 2522.7, the Commissioner determines that the lawful  sta-
          bilized rent as of August 1, 1977 should include the  5%  vacancy
          increase eliminated by the three month rule.

          Section 25-516(a) of the  Rent  Stabilization  Law  provides  for
          treble damages to be awarded unless "the owner establishes  by  a
          preponderance of the evidence that the overcharge w s  not  will-
          ful."  A lack of willfulness is  presumed  where,  as  here,  the
          overcharge is caused by the hypertechnical  nature  of  the  rent
          computation, e.g., violation of the three month rule.  See  Order
          Nos. BK 110266-RO and CG  110199-RT.   Accordingly,  the  Commis-
          sioner directs the refund of the  overcharges  of  $2,860.85  but
          denies the petitioner's request for treble damages.

          Upon the expiration of the period in which the own r  may  insti-
          tute a proceeding pursuant to Article 78 of  the  Civil  Practice
          Law and Rules, this order may be filed and enforced as a judg-
          ment, or the tenants may offset against any rent  thereafter  due
          the owner not in excess of twenty percent per month of t e  over-
          charge.




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

          ORDERED, that this petition be, and the same hereby  is,  granted
          in part and that the Rent Administrator's order be, and the  same
          hereby is, modified in accordance with this order and opinion.


          ISSUED:


                                                                           
                                                ELLIOT SANDER
                                                Deputy Commissioner


                                          
    

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