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

      APPEAL OF                              DOCKET NO.: DF410152RO

           Yat Tung Tse and Linda Tse,       DRO DOCKET NO.: AB410176R

                                             TENANT: Jill Tucker              


      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 
      in part.

      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 
      stabilization rent.

      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
                                      Deputy Commissioner

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