DF 510361 RT
                             STATE OF NEW YORK
                          OFFICE OF RENT ADMINISTRATION
                                   GERTZ PLAZA
                             92-31 UNION HALL STREET
                             JAMAICA, NEW YORK 11433

      ------------------------------------X  SJR No. 5565 (Remit)
      APPEAL OF                              DOCKET NO. DF 510361-RT 
                                                        FA 510137-RO         

                                          :  DISTRICT RENT OFFICE
           Mary Lou Willis (Tenant),         DOCKET NO. ZAK-510489-R
           Terrace Associates, c/o           CURRENT OWNER: Gimbel Holding
           Jed Management (Prior Owner),                    Company           

                              PETITIONERS : 


      On July 20, 1989 the above-named petitioner-tenant filed a Petition for 
      Administrative Review (Docket No. DF 510361-RT) against an order issued 
      on June 23, 1989 by the Rent Administrator, 92-31 Union Hall Street, 
      Jamaica, New York concerning the housing accommodations known as 425 
      West 160th Street, New York, New York, Apartment No. 5C, wherein the 
      Rent Administrator determined that because the tenant, who had commenced 
      occupancy on July 1, 1986 at a rent of $700.00 per month, had filed her 
      objection more than 90 days after the receipt of the amended RR-1 
      apartment registration form, the Initial Legal Regulated Rent was 

      On December 12, 1990 an order was issued deciding the administrative 
      appeal.  The appeal was remanded to the Rent Administrator to be 
      processed as an overcharge complaint filed within 90 days of the amended 
      initial registration, because the owner's failure to use the specified 
      method of mailing, resulting in the tenant not actually receiving the 
      amended registration, constituted a defective mailing.

      Terrace Associates filed a Petition for Administrative Review (Docket 
      No. FA 510137-RO) against the Commissioner's order, contending in 
      substance that the mailing was proper and that in any event it was 
      entitled to charge a "first rent."  

      Gimbel Holding Company filed a Petition in the Supreme Court pursuant to 
      Article 78 of the Civil Practice Law and Rules, asking for an order 

          DF 510361 RT

      reversing the Commissioner's order in Docket No. DF 510361-RT.  It 
      argued that it never had an opportunity to refute the tenant's 
      contention that she never received the amended RR-1, since it was not 
      sent a copy of the tenant's Petition for Administrative Review ("PAR") 
      even though it had participated in the proceeding before the 
      Administrator; that Section 26-517 (d) of the former Rent Stabilization 
      Law provided that the initial registration should be "mailed"; that 
      Section 26A of the former Rent Stabilization Code provides that "[s]uch 
      notice shall be served by the owner upon every such tenant by certified 
      mail..."; that Section 2528.1(d) of the current Rent Stabilization Code 
      provides that a copy of the initial apartment registration "shall be 
      sent by the owner to the tenant by certified mail..."; that Jed 
      Management sent the amended RR-1 to the tenant by certified mail, Return 
      Receipt Requested; that the amended RR-1 was also served by regular 
      mail, as attested to by an affidavit by the prior owner; that, upon 
      information and belief, the mailing by regular mail was never returned 
      to the owner and thus was presumably received by the tenant; that the 
      mailing by certified mail in conjunction with a mailing by regular mail 
      clearly constituted sufficient service; that the tenant's failure to 
      sign for the certified mail shows her intent to block the notice and 
      registration requirements; that none of the statutes or codes stated 
      that certified mailing should be with a Certificate of Mailing, which is 
      not a common way of mailing certified mail; and that the Court in 
      Reliance Properties Co L.P. v. Cruz, 143 Misc. 2d 556, N.Y.L.J. 4/6/89, 
      p.29, col. (App. Term 2d Dept.) ruled that "service of the lease renewal 
      offer by certified mail was proper compliance with the Rent 
      Stabilization Code, which requires that notice be sent by 'mail'", where 
      the tenant had refused to claim the mailing.

      After the filing of the Article 78 petition the attorneys for Gimbel 
      Holding Company stipulated to remit the proceeding to the DHCR, for a 
      redetermination on the merits after giving Gimbel Holding notice of the 
      PAR under Docket No. DF 510361-RT and affording it an opportunity to 
      respond.  On March 18, 1992 a copy of the PAR was sent to the owner in 
      care of its attorneys.  No answer has been received to date.

      The Commissioner is of the opinion that Docket No. FA 510137-RO should 
      be terminated, that Docket No. DF 510361-RT should be reopened, and that 
      this proceeding should be remanded to the Rent Administrator.

      An Administrative Appeal may be taken only against a Rent 
      Administrator's order, and not against a Commissioner's order deciding 
      another Administrative Appeal.  Other than the situation where 
      reconsideration is requested based upon the presence of fraud, 
      illegality or irregularity in a vital matter, a Commissioner's order may 
      be appealed only by an Article 78 petition in the Supreme Court, so the 
      prior owner's PAR (Docket No. FA 510137-RO) against the Commissioner's 
      order is being terminated.

      Section 9 NYCRR 2521.1(b)(1) of the Rent Stabilization Code provides in 
      substance that the Initial Legal Registered Rent shall be, for an 

          DF 510361 RT

      apartment for which the tenant files a timely challenge to the initial 
      registered rent in accordance with Section 9 NYCRR 2526.1(a)(3)(ii) of 
      the Code, the rent charged and paid on April 1, 1980 plus the lawful 
      increases charged and paid up to March 31, 1984.  Section 9 NYCRR 
      2526.1(a)(3)(ii) of the Code provides in pertinent part that as to 
      complaints of overcharge filed within 90 days of the initial 
      registration, the legal regulated rent for purposes of determining an 
      overcharge shall be deemed to be the rent charged and paid on April 1, 
      1980; or if the housing accommodation was subject to the Rent 
      Stabilization Law and Code for less than four years prior to the initial 
      registration then the initial legal regulated rent: plus in each case 
      any lawful increases and adjustments.

      As part of the requirements for the initial apartment registration, 
      Section 9 NYCRR 2528.2(d) of the Code effective May 1, 1987 provides 

           [o]ne copy of the initial Apartment Registration form which 
           pertains to the tenant's housing accommodation shall be sent 
           by the owner to the tenant by certified mail.  Service of such 
           form pursuant to this subdivision (d) together with the Notice 
           of Initial Legal Registered Rent shall constitute proper 
           service of such Notice of Initial Legal Registered Rent under 
           section 2523.1 of this Title.  Provided however, that for 
           registrations served prior to the effective date of this 
           subdivision (d), any method of service permitted by the DHCR 
           at the time of service shall be deemed to have the same effect 
           as service by certified mailing.

      It is the owner's position that, since Section 26-517(d) of the Rent 
      Stabilization Law provides that the initial registration be "mailed", 
      without specifying the method of mailing, certified mailing of the 
      amended initial apartment registration form to the tenant on August 12, 
      1986 (prior to the effective date of Section 2528.2[d] of the current 
      Rent Stabilization Code) was adequate service even though it was not 
      delivered to the tenant, but was unclaimed.

      The instructions (Form RR-5 [1-'84]) for rent registration under the 
      Omnibus Housing Act of 1983 contained certain provisions for delivering 
      the apartment registration (Form RR-1 [10-'83]) to a tenant in an 
      envelope.  An owner could:

           "obtain an acceptable proof of delivery in one of the following 

                @Hand-deliver the envelope to the tenant named, and get an 
                appropriate signed receipt . . . 

                @Use the U.S. Post Office "Carrier Route Pre-Sort" service, 
                through a bonded mailing house.  The Post Office will date- 
                certify the number of pieces received from the mailing house 

          DF 510361 RT

                for each building, and the bonded mail house will furnish a 
                list of addresses . . .

                @Obtain a signed and dated copy of Post Office form #PO 3877 
                "Acceptance of Registered, Insured, C.O.D. and Certified Mail: 
                which is available through your post office and can be used to 
                prove date of delivery of regular first-class mail to the post 
                office . . . 

           The proof(s) of receipt, properly signed and dated (by the tenant, 
           the post office, and the mailing house, as appropriate), will be 
           considered adequate by DHCR to establish the tenant's 90-day 
           challenge period, which will begin on the date of the receipt. . ."

      (The owner has the mistaken belief that mention of form #PO 3877 
      indicates that certified mail was permissible.  While Post Office form 
      #PO 3877 can be used for certified or registered mail, the Commissioner 
      notes that the form is often used as a certificate of mailing of a 
      number of pieces of mail.  At the upper right hand corner of the form is 
      the statement "[a]ffix stamp here if issued as certificate of mailing or 
      for additional copies of this bill."  Indeed, in Docket No. EJ 410272- 
      RO/BC-410326-R, another proceeding involving a tenant who did not 
      receive an initial 1984 registration sent by certified mail, the form 
      #PO 3877 submitted by the owner for the 1986 registration shows a fee of 
      15 cents each for 15 apartments, including the subject apartment, 
      indicating that the form was just being used as a certificate of 
      mailing, in accordance with the instructions.  The mention of the form 
      in the RR-5 instructions therefore cannot be taken as authorizing 
      certified mail, particularly since the instructions say the form "can be 
      used to prove date of delivery of regular first-class mail to the post 
      office . . ." [Emphasis added])

      The Commissioner is of the opinion that failure to utilize the specified 
      methods of service, coupled with non-receipt by the tenant and the 
      former owner's knowledge of the tenant's non-receipt constituted a 
      defective registration.  When the former owner, upon becoming aware that 
      its use of the unauthorized and restrictive method of certified mailing 
      had resulted in the tenant not receiving the registration, could easily 
      have fulfilled the registration requirements by delivering a copy of the 
      registration to the tenant in one of the three ways specified in the 
      instructions, the former owner did not do so, so there is no evidence of 
      the tenant receiving the amended initial registration.  The affidavit of 
      Jane Mark, the former owner, that she served the RR-1 form "by certified 
      and regular mail" is not sufficient to prove the delivery of regular, 
      unrestricted first-class mail into the postal system, particularly since 
      the prior owner is an interested party and, as such, is not specified as 
      an acceptable mailer in the instructions, which provided only for 
      mailing via acknowledged delivery of mail to the post office or to a 
      disinterested third-party bonded mailing house.

      It does not matter that the service requirements were changed with the 
      adoption of the current Rent Stabilization Code on May 1, 1987.   While 

          DF 510361 RT

      the owner cited Section 62A of the former Rent Stabilization Code, that 
      concerns the DC-2 notice sent to a tenant informing them that their 
      apartment was previously subject to Rent Control and that they had a 
      right to file a fair market rent appeal.  While the owner is correct in 
      stating that a tenant's refusal of a certified letter containing a DC-2 
      notice does not prevent the mailing from constituting proper service, 
      that is not applicable to the present case, since certified mailing of 
      a DC-2 form is required, and is indeed the only method of service 
      permitted, while in the case of an (amended) initial registration served 
      in 1986 certified mailing was not one of the three options.

      The Reliance Properties case is not determinative in the present 
      instance since, unlike the present case, there is no indication that the 
      provision that the lease renewal offer be sent by "mail" had been more 
      specifically implemented by instructions that did not provide for 
      certified mail as an acceptable method.

      The Commissioner notes that Policy Statement 92-3, issued August 14, 
      1992, has memorialized the position taken in this order by reiterating 
      that for initial registrations filed prior to May 1, 1987, the only 
      acceptable proof of service on the tenant is by one of the three methods 
      mentioned earlier in this order.  

      Accordingly, this proceeding is being remanded to the Rent Administrator 
      for processing as an objection filed within 90 days of the amended 
      initial registration.  Both the former and current owners should be 
      allowed to participate.

      The Commissioner notes that the administrator's file contains voluminous 
      evidence submitted by the former and current owners in regard to their 
      assertions of improvements made to the apartment during a vacancy period 
      and in support of their contentions that the apartment had been altered 
      to such an extent that it constituted a new unit and that it should be 
      entitled to charge a first rent.  The Commissioner further notes, 
      however, that none of these submissions were served upon the tenant, so 
      that the tenant did not have the opportunity to respond thereto or to 
      submit further evidence.

      Accordingly, on remand, such service should be effectuated and such 
      opportunity should be provided.

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

      ORDERED, that Docket No. FA 510137-RO be, and the same hereby is, 
      terminated; that Docket No. DF 510361-RT be, and the same hereby is, 
      reopened; and that this proceeding be, and the same hereby is, remanded 
      to the Rent Administrator for further processing in accordance with this 
      order and opinion. 


          DF 510361 RT

                                      JOSEPH A. D'AGOSTA
                                      Acting Deputy Commissioner



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