DB 410110 RO

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

      APPEAL OF                              DOCKET NO. DB 410110 RO

                                          :  DISTRICT RENT ADMINISTRATOR'S
           Michael Power,                    DOCKET NO. L 3110104-R
                                             TENANT: Lenore Anastasio         

                            PETITIONER    : 


      On February 8, 1989, the above-named owner filed a petition for 
      administrative review of an order issued on January 5, 1989, by a 
      District Rent Administrator concerning the housing accommodations known 
      as 122 West 71st Street, New York, New York, Apartment No. 3, wherein 
      the Administrator determined that the owner had collected excess rents 
      from the tenant.

      The Commissioner notes that this proceeding was filed prior to April 1, 
      1984.  Sections 2526.1 (a) (4)  and 2521.1 (d) of the Rent Stabilization 
      Code (effective May 1, 1987) governing rent overcharge and fair market 
      rent proceedings provide that determination of these matters be based 
      upon the law or code provisions in effect on March 31, 1984.  Therefore, 
      unless otherwise indicated, reference to Sections of the Rent 
      Stabilization Code (Code) contained herein are to the Code in effect on 
      April 30, 1987.

      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 by the administrative appeal.  

      This petition was commenced on February 14, 1984 by the filing of an 
      overcharge complaint.  The tenant stated, among other things, that she 
      was told that the prior tenant was rent controlled, and that she was 
      never presented with a rental history.  She requested that her rent be 

      On March 20, 1984, the owner was notified that a complaint had been 
      filed and he would be "... required to produce rent records for the 
      subject apartment dating back at least to June 30, 1974 or the date on 
      which the apartment first became subject to rent stabilization, if 
      later."  The notice went on to advise the owner "... that discarding 
      such records before or after April 1, 1984 will be done at your own 

      Subsequently, the Administrator converted the proceeding to a fair 
      market rent appeal, notified the owner of his opportunity to submit 

          DB 410110 RO

      comparability data, and asked the owner to submit proof of any alleged 
      vacancy improvements in the subject apartment.

      On October 3, 1988, the owner advised the Division of Housing and 
      Community Renewal (DHCR) that he did not keep records for such a lengthy 
      period of time.  Accordingly, he acknowledged that he could not produce 
      any leases, rent ledgers or proof of the vacancy improvements he made in 
      the subject unit immediately before this tenant took occupancy.

      In the order here under review, the Administrator established a fair 
      market rent of $241.07 by using the special guidelines only and did not 
      allow for any increase for vacancy improvements.  This order was based 
      on the owner's failure to supply the agency with any of the necessary 

      In his petition for administrative review, the owner submits a variety 
      of receipts for alleged vacancy improvements in the subject apartment.  
      The owner offers the explanation that a death of the principal owner of 
      the subject premises and a later death of a former managing agent of the 
      subject premises has made the retrieval of prior records difficult.

      In her answer to the petition, the tenant notes that the owner took over 
      five years to produce these receipts for the vacancy improvements.  In 
      the alternative, the tenant presents a point-by-point rebuttal of the 
      alleged vacancy improvements by noting, among other things, errors in 
      the documentation.

      In a supplemental submission, the owner asserts, among other things, 
      that DHCR could not convert this overcharge complaint to a fair market 
      rent appeal because the statutory requirements for a fair market rent 
      appeal had not been met by the tenants complaint, i.e., the tenant 
      failed to allege that the initial legal regulated rent exceeded the fair 
      market rent.  The owner also asserts that he was prejudiced by the 
      DHCR's delay in processing the case, specifically by the delay in 
      requesting proof of service of a DC-2 notice.  Further, the owner 
      asserts that the records requested by the Administrator were more than 
      four years old, and the owner was not required to retain records more 
      than four years.  The owner cites the case of J.R.D. Management Corp. v. 
      Eimicke, 148 A.D. 2d 610, 539 N.Y.S. 2d 667 (App. Div. 2d Dept., 1989) 
      to support his claim.

      After careful consideration, the Commissioner is of the opinion that 
      this petition should be denied.

      The owner's claim that the DHCR had no right to convert this proceeding 
      to a fair market rent appeal is without merit.  Although the tenant used 
      the complaint form normally used for an overcharge, it is apparent from 
      the tenant's complaint that the tenant wished to challenge the initial 
      legal regulated rent.  The tenant specifically stated that she was the 
      first stabilized tenant and that she questioned the lawfullness of her 
      initial rent and wanted her rent verified.  The Commissioner finds that 
      the tenant's fair market rent appeal is not materially defective because 
      of the tenant's failure to allege that the rent exceeded the fair market 
      rent for the subject apartment.  Such allegation is implicit in the 
      tenant's complaint.   Accordingly, the Administrator acted properly by 
      processing this case as a fair market rent appeal.

      Further, the Commissioner finds that the Administrator correctly 

          DB 410110 RO

      required the owner to produce documentation that was more than four 
      years old.

      The initial notice sent to the owner in September 1984 clearly advised 
      the owner regarding his obligation to retain and produce records.  In 
      fact, that notice advised the owner of his obligation to retain records 
      from June 30, 1974.

      Similarly, the Commissioner finds that Administrator correctly required 
      the owner to produce proof of service of the DC-2 on the tenant despite 
      the fact that it was more than four years old.  The owner must prove 
      that the first stabilized tenant after vacancy decontrol had a full 
      opportunity to challenge the initial rent. 

      The Commissioner is of the opinion that the JRD case is not applicable 
      in this proceeding.  The change effected by Section 14(g) of the Omnibus 
      Housing Act and Section 26-516(g) of the Rent Stabilization Law, as 
      applied in the JRD case, only involves rent overcharge proceedings, and 
      does not apply to fair market rent appeals.  Section 26-513 of the Rent 
      Stabilization Law, which deals with fair market rent appeals, continues 
      to provide for determination of the fair market rent from the date of 
      the initial stabilized tenancy.  In this case, the Administrator 
      properly established the fair market rent as of June 1, 1979, the date 
      of commencement of the initial stabilized lease. 

      Additionally, the Commissioner notes that the JRD case is applicable in 
      the Second Department only.  This proceeding is in the First Department 
      where the case of Lavanant v. DHCR, 148 A.D. 2d 185, 544 N.Y.S. 2d 331 
      (App. Div. 1st Dept. 1989) is the determinative authority.

      Finally, the Commissioner will not accept the submitted documents 
      purported to validate alleged vacancy improvements.  These documents 
      were submitted for the first time at the administrative review level.  
      The owner's explanation for the failure to locate these documents for 
      over five years is insufficient.  Clearly, the failure to produce these 
      documents for this extended period of time is evidence of a lack due 
      diligence by the owner.

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

      ORDERED, that this petition be, and the same hereby is, denied, and  
      that the Rent Administrator's order be, and the same hereby is, 


                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner


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