CL 110197 RO

                                STATE OF NEW YORK
                          OFFICE OF RENT ADMINISTRATION
                                   GERTZ PLAZA
                             92-31 UNION HALL STREET
                             JAMAICA, NEW YORK 11433

      APPEAL OF                              DOCKET NO. CL 110197 RO

                                          :  DRO DOCKET NO. TC 081654-G/
           Saunders Street Associates,                      27,819      

                                             TENANT: Ruth Wasserman           

                               PETITIONER : 


      On December 9, 1988, the above-named petitioner-owner timely refiled a 
      Petition for Administrative Review against an order issued on December 
      3, 1986 , by the Rent Administrator, 10 Columbus Circle, New York,      
      New York concerning the housing accommodations known as 63-45 Saunders 
      Street, Rego Park, New York, Apartment No. 6A, wherein the Administrator 
      determined that the tenant had been overcharged.

      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 in December 1983 by the filing 
      of a rent overcharge complaint by the tenant.

      A copy of the complaint was served on the current and prior owners of 
      the subject premises.

      The prior owner submitted a complete rental history of the apartment 
      from its base date, (May 31, 1968) including a set of leases and a rent 
      ledger for a time period not covered by any of the leases.

      In the order here under review, the Administrator established the legal 
      stabilization rent at $189.97 for the period commencing August 1, 1981 
      and terminating July 31, 1984 and directed the owner to refund an 
      overcharge of $6221.42 inclusive of excess security and interest.

      In its appeal, the owner contends:

           1) that a true and accurate rent history shows there was no 

           2) that it purchased the building on March 4, 1985 and is not 
           responsible for any overcharges collected prior to that date;

           3) that it is not bound by the order because it was never named a 
           party to the proceeding;

          CL 110197 RO

           4) that it was never properly served with the complaint or the 
           order; and 

           5) that it must be served with a new complaint but the statute of 
           limitations limits a finding of overcharge to a period of forty- 
           eight months.

      The tenant contends that the order is correct and that the current owner 
      is liable because a new owner assumes all debts and responsibilities of 
      the former owner.  The tenant's additional remarks do not address the 
      issues raised by the owner and therefore are not germane to this 

      After careful consideration, 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) and to produce such records to the DHCR upon 

      Section 26-516 of the 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 to produce rent records for 
      more than four (4) years prior to the most recent registration, and 
      concomitantly, established a four year limitation on the calculation of 
      rent overcharges.

      It has 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 (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 rights 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 four years prior to April 1, 1984 of 
      the 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).

      However, it has recently been held in the case of J.R.D. Mgmt. v. 
      Eimicke, 148 A.D.2d 610. 539 N.Y.S. 2d 667 (App. Div. 2d Dept., 1989). 
      motion for leave to reargue or for leave to appeal to the Court of 
      Appeals denied ( App. Div. 2d Dept., 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), 

          CL 110197 RO

      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 four 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 Dept. 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 instant case the subject dwelling unit is located in the 
      Second Department, the DHCR is constrained to follow the JRD decision in 
      determining the tenant's overcharge complaint, limiting the requirement 
      for rent records to April 1, 1980.  An examination of the rent records 
      from April 1, 1980 discloses that no rent overcharge occurred in that 
      the rent from August 1, 1978 to July 31, 1981 was $215.00 per month and 
      was then increased to $251.99 effective August 1, 1981 pursuant to a 17% 
      increase for a three year renewal lease under Guideline 12a.  Therefore, 
      the Rent Administrator's order finding a rent overcharge must be 

      If the owner has already complied with the Rent Administrator's order 
      and there are arrears due to the owner as a result of the instant 
      determination, the tenant shall be permitted to pay off the arrears in 
      twenty four equal monthly installments.  Should the tenant vacate after 
      the issuance of this order or have already vacated, said arrears shall 
      be payable immediately.

      THEREFORE, in accordance with the Appellate Division ruling in JRD, it 

      ORDERED, that this petition for administrative review be, and the same 
      hereby is, granted, that the order of the Rent Administrator be, and the 
      same hereby is, revoked, and it is found that no rent overcharge 


                                      JOSEPH A. D'AGOSTA
                                      Acting Deputy Commissioner


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