DE410240RO
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. DE410240RO
: DISTRICT RENT OFFICE
Beerma Realty, DOCKET NO. ZCG410235R
TENANT: Caryn Montak
PETITIONER :
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART
On May 18, 1989, the above-named owner filed a Petition for
Administrative Review against an order issued on April 28, 1989, by a
Rent Administrator, concerning the housing accommodations known as
325 West 77th Street, New York, Apartment No. 5C, wherein the Rent
Administrator determined that the owner had overcharged the tenant.
This proceeding was originally commenced by the filing of a rent
overcharge complaint by the tenant in July of 1988. The owner was
served with a copy of the tenant's complaint and submitted a complete
rental history as required. The owner stated in substance that
extensive renovations prior to the tenant's occupancy in October, 1986,
justified an increase pursuant to Section 2522.4 of the Rent
Stabilization Code. The owner submitted bills and cancelled checks
totaling $16,232.23. Approximately $13,000 in cancelled checks,
however, were corroborated only by a handwritten receipt for
"renovations" to the subject apartment. The remainder was substantiated
by itemized bills for the purchase of: a refrigerator; windows; and 18
items from "Square Deal Plumbing Sales."
The Rent Administrator directed the owner to submit the contractor's
itemization for the renovations totaling $13,000. The owner submitted
in response a typed breakdown of work done in the apartment, without
documentation from the contractor.
In Order Number ZCG410235R, the Rent Administrator established the
lawful stabilized rent as $606.96 effective October 15, 1986, determined
that the tenant had been overcharged and directed a refund to the tenant
of $28,331.00, including treble damages on overcharges collected on and
after April 1, 1984. The Administrator excluded the aforementioned
$13,000 ("the $13,000" herein) in calculating the increase for new
equipment or improvements, because the owner had not itemized or
properly documented the expenditure. The order grants only a vacancy
improvement increase of $80.81, based on expenditures totalling
$3,232.23.
DE410240RO
In this petition, the owner contends in substance: that the Rent
Administrator arbitrarily excluded the $13,000 when applying Section
2522.4(a)(1) of the Code; that the Administrator had erroneously failed
to consider the owner's submission dated April 20, 1989, and received by
the DHCR on April 27, 1989 in timely rebuttal to the treble-damage
notice dated April 10, 1989; that the failure to consider that
submission before issuing the subject order constituted a denial of due
process of law; that the tenant did not contest the renovations and the
owner substantiated the costs thereof, so that itemization was not
required; and that at any rate treble damages are not warranted because
the Commissioner has held that they are not to be imposed where the
overcharge is the result of disallowing unsubstantiated expenditures for
improvements.
In answer to the owner's petition, the tenant states in substance: that
the order correctly excludes the $13,000 because there is no evidence
that such renovations were in fact made; that the tenant did dispute the
renovations; that no new floors were installed, contrary to the owner's
breakdown of the renovations; that the only bathroom "renovation" was a
resurfacing of the existing tub and a new "vanity"; that the kitchen
renovations consisted of a new sink, appliances and cabinets for which
the Rent Administrator did grant an increase (based on the $3,232.23
that was properly documented); and that some of the owner's cancelled
checks are dated after the tenant's occupancy in October, 1986.
During the processing of this appeal, the owner has been served with
copies of the tenant's responses to the PAR, as well as with the
tenant's submission, disputing the renovations, which had been submitted
below but not previously served on the owner.
The Commissioner is of the opinion that this petition should be granted
in part.
Section 2522.4 of the Rent Stabilization Code provides in pertinent part
that an owner is entitled to a rental increase where there has been an
installation of new equipment or improvements in an apartment during the
vacancy between tenancies. Such increase in the monthly stabilization
rent shall be equal to 1/40 of the total cost, including installation,
but excluding finance charges.
No appeal has been taken of the Administrator's determination to
recognize the owner's aforementioned itemized purchases. The issue
herein concerns the remaining $13,000. Because it was corroborated only
by a summary bill for "renovation" and by the owner's checks to the
order of the party mentioned on that bill, the Administrator was
correct, in such absence of documentation as to what that renovation
consisted of, in refusing to allow 1/40 of the $13,000 to be added to
the lawful rent herein as an improvement-based increase.
On the other hand, however, (1) the checks in question were all drawn in
the latter half of 1986, and the tenant took occupancy in October of
that year, (2) the tenant concedes that windows were installed and (in
her answer to the PAR) that the bathroom was "refurbished" and (3)
someone has to have done that installation and refurbishing, as well as
providing the labor connected with the aforementioned 18 items that the
Administrator found were purchased for the subject apartment. The
Commissioner will therefore find that some additional amount (although
DE410240RO
a specific amount of $13,000 was not proven by the owner) was spent for
allowable vacancy improvements. Although the aforementioned lack of
itemized documentation precludes permitting the rental increase taken by
the owner therefor, the owner has shown nonwillfulness as to the
resulting overcharge, and the treble-damage penalty pertaining to it
must therefore be removed.
In this case the entire overcharge found by the Administrator is
attributable to the excessive vacancy improvement increase discussed
above. The total will therefore be divided by three, with interest
assessed on each month's overcharge and excessive security deposited
added to that total, to arrive at the amount now due the tenant.
Other contentions of the owner do not require extended discussion; thus
the Commissioner has considered all the owner's submissions, eliminating
any due-process problem associated with the Administrator's inadvertent
failure to do so; and contrary to petitioner's contention, the tenant
does contest the greater part of the claimed renovations, so that the
requirement of itemization cannot be excused in calculating the vacancy-
improvement increase herein.
The owner is directed to reflect the findings and determinations made in
this order on all future registration statements, including those for
the current year if not already filed, citing this order as the basis
for the change. Registration statements already on file, however,
should not be amended to reflect the findings and determinations made in
this order. The owner is further directed to adjust subsequent rents to
an amount no greater than that determined by this order plus any lawful
increases.
This order may, upon the expiration of the period in which the owner may
institute a proceeding pursuant to Article 78 of the Civil Practice Law
and Rules, be filed and enforced in the same manner as a judgment, or
not in excess of twenty percent per month thereof may be offset against
any rent thereafter due the owner.
If the owner has already complied with the Rent Administrator's order
and there are arrears due to the owner as a result of this
determination, the tenant may pay them off in 24 equal monthly
installments. Should the tenant vacate have already 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 to the
extent set forth above, the Rent Administrator's order being modified
consistently therewith. The total overcharge and lawful rent, as of
April 30, 1989, were $11,112.44 and $661.59, respectively.
DE410240RO
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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