DH210476RO
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.: DH210476RO
Peter J. Burgess Realty Corp. DRO DOCKET NO.: K000805R
TENANT: Raymond Perez
PETITIONER
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
On August 18, 1989, the above-named owner timely refiled a petition for
administrative review of an order issued on May 11, 1989 by a District
Rent Administrator concerning the housing accommodations known as
250 Pacific Street, Apartment 16, Brooklyn, New York wherein the Rent
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 issues
raised by the administrative appeal.
This proceeding was commenced by the filing of a rent overcharge
complaint on February 22, 1985. The tenant alleged that the subject
building was a part of a New York City management program and that he
believed he was paying more than other tenants in his building. The
tenant stated that he took occupancy of the subject apartment on January
15, 1984 under a two year escalated lease at a rent of $325.00. On
January 1, 1985 the second portion of the escalated lease took effect
and the monthly rent was increased to $350.00.
In its answer, the owner alleged that the subject building was owned by
the City of New York when the complainant-tenant took occupancy. The
petitioner managed the building for the City of New York under the
supervision of the City's Department of Housing Preservation and
Development (HPD). Further, the owner alleged that it purchased the
subject building in June of 1985 from the City of New York and that no
overcharge occurred.
In the order of May 11, 1989, the Administrator found that the use of an
escalator clause in the two year vacancy lease was prohibited by Section
2522.5(e)(1) of the Rent Stabilization Code. Accordingly, the
Administrator based all the overcharge calculations on the lower
escalator lease figure of $325.00 per month which amount the
Administrator referred to as the Initial Legal Registered Rent. The
Administrator also found that the overcharges were willful and assessed
treble damages. As a result of the Administrator's calculations, it was
DH210476RO
determined that the total overcharges through May 31, 1989 were
$4,239.60 including treble damages and excess security and that the
lawful stabilization rent was $377.26 per month for the lease period
begining January 1, 1989.
In its petition for administrative review, the owner asserts that the
Administrator's order must be revoked and realleges that no overcharges
occurred. The owner asserts that the subject building was exempt from
rent regulation when the complainant-tenant took occupancy in 1984.
Further, the owner alleges that only when the building was sold by the
City of New York to the petitioner-owner did it return to rent
stabilization status. The owner alleges that the lawful stabilization
rent for the units in the building after its return to rent
stabilization status was to be the rent being charged at the time of the
sale. The owner alleges that after the owner acquired the property, all
rent guidelines were correctly followed. Documents submitted by the
owner included a copy of the executed deed which transferred the
property from the City of New York to the petitioner-owner on May 28,
1985.
The Commissioner is of the opinion that this petition for administrative
review should be granted.
It is uncontested that at the time the tenant took occupancy of the
subject apartment the building was owned by the City of New York.
Section 2520.11 (b) of the Rent Stabilization Code states that housing
accommodations which are owned or operated by a municipality or a public
housing authority are exempt form rent regulation by the Division of
Housing and Community Renewal (DHCR). Section 26-507 (a) of the Rent
Stabilization Law states that upon the sale of the municipally-owned
building it becomes subject to the Rent Stablization Law ". . . at the
last rent charged by the city, or on behalf of the city, for the
dwelling unit."
Accordingly, the Adminiatrator's calculations should have been based on
the monthly rental amount of $350.00 which was "the last rent charged by
the city" and not the $325.00 per month which was the monthly rental
charged in the first year of the two year lease which contained the
escalator clause.
All subsequent increases were within appropriate rent guidelines and no
overcharge occurred.
If the owner has already complied with the Rent Administrator's order
and there are arrears due to the owner as a result of the instant
determination, the tenant is permitted to pay off the arrears in 12
equal monthly installments. Should the tenant vacate after the issuance
of this order or have already vacated, said arrears shall be payable
immediately.
THEREFORE, in accordance with Rent Stabilization Law and Code, it is
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ORDERED, that this petition for administrative review be, and the same
hereby is, granted, that the order of the Rent Administrator be, and the
same hereby is, revoked, and it is found that no rent overcharge
occurred.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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