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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. CL 110197 RO
: DRO DOCKET NO. TC 081654-G/
Saunders Street Associates, 27,819
TENANT: Ruth Wasserman
PETITIONER :
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE APPEAL
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
overcharge;
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;
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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
proceeding.
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
demand.
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),
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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
revoked.
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
is
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
occurred.
ISSUED:
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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