DF 510361 RT
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
------------------------------------X SJR No. 5565 (Remit)
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. DF 510361-RT
(reopened)
FA 510137-RO
: DISTRICT RENT OFFICE
Mary Lou Willis (Tenant), DOCKET NO. ZAK-510489-R
and
Terrace Associates, c/o CURRENT OWNER: Gimbel Holding
Jed Management (Prior Owner), Company
PETITIONERS :
------------------------------------X
ORDER AND OPINION TERMINATING DOCKET NO. FA 510137-RO REOPENING
DOCKET NO. DF 510361-RT, AND REMANDING PROCEEDING ON APPEAL
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
$700.00.
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
that:
[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
ways:
@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.
ISSUED:
DF 510361 RT
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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