STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: DF410152RO
Yat Tung Tse and Linda Tse, DRO DOCKET NO.: AB410176R
TENANT: Jill Tucker
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART AND MODIFYING ADMINISTRATOR'S ORDER
On June 19, 1989, the above-named petitioner-owner filed a Petition for
Administrative Review against an order issued on May 19, 1989, by the
Rent Administrator, 92-31 Union Hall Street, Jamaica, New York,
concerning the housing accommodations known as 21 Cleveland Place,
New York, New York, Apartment No. 3C, wherein the Administrator
determined that the owner had overcharged the tenant.
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 commenced on February 11, 1986 when the tenant filed
a complaint of rent overcharge. The tenant asserted that the owner was
collecting an overcharge in compensation for permitting her to remain as
the tenant of record after she had occupied the subject apartment as a
In response to the complaint, the owners stated that the tenant was, in
fact, originally a squatter who had illegally sublet the premises
without the owners' consent and who had voluntarily agreed to pay the
rent being charged (a lesser amount than she had paid as a subtenant) in
return for her own lease to the apartment.
Subsequently, the owners were notified of the possible imposition of
treble damages and were afforded an opportunity to submit evidence to
rebut the finding of a willful overcharge.
In response, the owners disputed the rent figure as calculated by the
Administrator and asserted that because the tenant had not paid the rent
for a year, the rent owed by the tenant exceeded any actual overcharge.
In the order here under review,the Administrator established the legal
stabilization rent at $234.26 for the lease period beginning June 1,
1985 and directed the owners to refund overcharges of $16,114.48
inclusive of excess security and treble damages.
In their appeal, the owners contend that because of the circumstances
under which the apartment was rented to the tenant, the written
agreement which settled all disputes between the parties should be
recognized and sustained. This agreement had been made in good faith
upon advice of counsel, and if such advice was incorrect, there should
not be a finding of willful overcharge. In addition, the owners contend
that should the overcharge finding be sustained, the amount to be
refunded should be decreased in that the tenant's initial rent should
have been based on the prior rent of $219.83 and not based on a rent of
$192.50. Further, because no rent was been paid to the owners since
June 1, 1988, the overcharge period should be reduced to eleven months.
In substantiation of the allegation, the owners submit a copy of a
petition initiating a non-payment proceeding. Finally, the owners
contend that the rent established by the Administrator is unfair and
disregards the rent level at which the building can be operated. Along
with their petition, the owners also submitted a copy of the written
agreement with the tenant. It does not appear that the tenant was
represented by counsel when she signed such agreement.
The tenant contends that the petition should be denied because the
evidence indicates that the overcharge was willful.
The Commissioner is of the opinion that this petition should be granted
Pursuant to Section 2520.3 of the Rent Stabilization Code, the Code
shall be construed to carry out the intent of the Rent Stabilization Law
(RSL) to ensure that such statute shall not be subverted or rendered
ineffective, directly or indirectly, and to prevent the exaction of
unjust, unreasonable and oppressive rents and rental agreements.
Section 2520.13 of the Code provides in pertinent part that a tenant
cannot by agreement waive any benefit provided by the RSL or the Code.
Accordingly, the agreement by which the tenant agreed to pay an
overcharge is void and the rent is limited to the amount established
under the Rent Stabilization Law and Code.
The Commissioner notes that the tenant's initial lease and the prior
tenant's renewal lease commenced during the same guidelines period. An
owner of a rent stabilized apartment may not compound guideline
increases (commonly termed "pigybacking") during the same guidelines
period. Accordingly, the Administrator correctly applied the guideline
increase and vacancy allowance applicable to the tenant's vacancy lease
to the rent in effect on September 30, 1984 to establish the legal
With regard to treble damages, Section 2526.1 of the Code provides for
the assessment of a penalty of treble damages for all willful
overcharges. Pursuant to the RSL, all overcharges are presumed willful
unless the owner overcomes the presumption by proving by a preponderance
of the evidence that the overcharge was not willful.
It has been found in previous cases that an overcharge resulting from
"piggybacking" is not considered willful. However, any overcharge which
may result from "piggybacking" in the instant case would be so small in
terms of the total overcharge as to not qualify for a finding that the
overcharge was not willful.
The owners' assertion of reliance on legal advice does not meet the
requirement imposed by Code Section 2526.1. Accordingly, the
Administrator did not err in imposing treble damages.
It is noted that the non-payment proceeding brought under index no.
05327/90 was discontinued by stipulation in which the owner accepted
payment of $2,832.08 for rent arrears claimed at the rate of $325.60.
A subsequent non-payment proceeding (index no. 079418/90) was settled by
stipulation; the tenant paid $1,953.60.
Regarding the total overcharge to be refunded, review of the record
reveals that no overcharge was collected from June 1, 1988 through May
31, 1989. Consequently, the Administrator's order should be modified to
eliminate the overcharge finding for that period of time. The
Commissioner notes that the failure to collect an overcharge for eleven
(11) months does not affect the willfulness of the overcharge previously
The Commissioner makes the following correction in the rent calculation
chart: the overcharge for the lease period June 1, 1987 - May 31, 1989
is calculated for only twelve months - $111.16/mo. overcharge times 12
months equals $1333.92. The total overcharge for the period from
November 1, 1984 to May 31, 1989 is $1333.92 + $2,777.76 = $4,111.68 x
3 (treble damages) = $12,335.04 + $111.16 (excess security) =
With regard to rent levels at which the building can be operated, the
Commissioner notes that various sections of the Rent Stabilization Code
allow an owner to file applications for rent increase due to hardship.
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.
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
THEREFORE, in accordance with the provisions of the Rent Stabilization
Law and Code, it is
ORDERED, that this petition be, and the same hereby is, granted in part
and that the Administrator's order be, and the same hereby is, modified
in accordance with this order and opinion. The total amount of the rent
overcharge is $12,446.20.
JOSEPH A. D'AGOSTA