DK610308RO

                                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 
      IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
      APPEAL OF                              DOCKET NO. DK610308RO

                                          :  DRO DOCKET NO. ZB3101441RT
           Combined Associates,
                                             TENANT: Joseph Garvin            
              
                            PETITIONER    : 
      ------------------------------------X                             


          ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
                                     IN PART


      On November 20, 1989 the above-named petitioner-owner filed a Petition 
      for Administrative Review against an order issued on October 18, 1989   
      by the Rent Administrator, 92-31 Union Hall Street, Jamaica, New York 
      concerning the housing accommodations known as 2165 Chatterton Avenue, 
      Bronx, New York, Apartment No. 6F wherein the Rent Administrator 
      determined that the owner had overcharged the tenant.

      The Commissioner notes that this proceeding was filed prior to April 1, 
      1984.  Sections 2526.1 (a) (4)  and 2521.1 (d) of the Rent Stabilization 
      Code (effective May 1, 1987) governing rent overcharge and fair market 
      rent proceedings provide that determination of these matters be based 
      upon the law or code provisions in effect on March 31, 1984.  Therefore, 
      unless otherwise indicated, reference to Sections of the Rent 
      Stabilization Code (Code) contained herein are to the Code in effect on 
      April 30, 1987.

      The issue herein is whether the Rent Administrator's order was 
      warranted.

      The applicable sections of the Law are Section 26-516 of the Rent 
      Stabilization Law and Section 2526.1(a) of the current Rent 
      Stabilization Code.

      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 originally commenced by the filing in March, 1984   
      of a rent overcharge complaint and Fair Market Rent Adjustment 
      Application ("fair market rent appeal") by the tenant, in which he 
      stated that he had commenced occupancy on August 1, 1974 at a rent of 
      $155.00 per month.


      The owner was served with a copy of the complaint and was requested to 
      submit rent records to prove the lawfulness of the rent being charged.  







          DK610308RO


      In answer to the complaint, the owner submitted leases and/or rent 
      ledgers from January 1, 1970, prior to the time that the first 
      stabilized tenant commenced occupancy on April 1, 1972.  While this 
      included a lease of the prior tenant from April 1, 1973 to March 31, 
      1976, the rent ledger showed him as paying a rent of $127.95 through 
      March, 1974, paying a rent of $140.00 for April, 1974, and paying a rent 
      of $144.25 as of May, 1974.  Then payments of $155.00 were received from 
      the complainant beginning August, 1974.

      In an order issued on October 18, 1989 the Administrator determined an 
      overcharge of $2,840.08 as of July 31, 1986.  The order listed a lease 
      for the prior tenant from April 1, 1972 to March 31, 1974 at an "Actual 
      Rent Charged" of $127.95, and next listed the complainant's vacancy 
      lease beginning August 1, 1974.

      In this petition, the owner contends in substance that the Administrator 
      incorrectly listed the lease commencing April 1, 1972 as expiring on 
      March 31, 1974 rather than March 31, 1973, and ignored the lease from 
      April 1, 1973 to March 31, 1976 at a rent of $144.25; that the rent 
      ledger shows that the prior tenant, although not paying a rent increase 
      for the first year of his renewal lease, did begin paying the increase 
      in April, 1974, without any indication of a lease renewal; that greater 
      evidentiary weight should be given to the lease than to the rent ledger; 
      that the Administrator's rent chart omits the period from April 1, 1974 
      to July 31, 1974, even though the prior tenant began paying an increased 
      rent as of April 1, 1974; that the DHCR may not require an owner to 
      maintain or produce more than four year's worth of past rental records, 
      and therefore may not compute lawful rents back to 1972, 1973 and 1974; 
      and that the Civil Practice Law and Rules provides that an action in 
      contract has a statute of limitations of six years, so the DHCR may not 
      recompute the rent more than six years prior to the tenant's filing of 
      his compliant in 1984.

      The tenant did not submit an answer, although given an opportunity to do 
      so.

      The Commissioner is of the opinion that this petition should be granted 
      in part.
           
      Section 42A of the former Rent Stabilization Code requires that an owner 
      retain complete records for each stabilized apartment in effect from 
      June 30, 1974 (or the date the apartment became subject to rent 
      stabilization, if later) and to produce such records to the DHCR upon 
      demand.

      Section 26-516 of the Rent Stabilization Law, effective April 1, 1984, 
      limited an owner's obligation to provide rent records by providing that 
      an owner may not be required to maintain or to produce rent records for 
      more than four (4) years prior to the most recent registration and, 
      concomitantly, established a four year limitation on the calculation of 
      rent overcharges.


      It has been the DHCR's policy that overcharge complaints filed prior to 
      April 1, 1984 are to be processed pursuant to the Law or Code in effect 
      on March 31, 1984. [See Section 2526.1 (a) (4) of the current Rent 
      Stabilization Code.]  The DHCR has therefore applied Section 42A of the 


          DK610308RO

      former Code to overcharge complaints filed prior to April 1, 1984, 
      requiring complete rent records in these cases.  In following this 
      policy, the DHCR has sought to be consistent with the legislative intent 
      of the Omnibus Housing Act (Chapter 403, Laws of 1983), as implemented 
      by the New York City Conciliation and Appeals Board (CAB) the 
      predecessor agency to the DHCR, to determine rent overcharge complaints 
      filed with the CAB prior to April 1, 1984, by applying the law in effect 
      at the time such complaints were filed so as not to deprive such tenants 
      of their rights to have the lawful stabilized rent determined from the 
      June 30, 1974 base date and so as not to deprive tenants whose 
      overcharge claims accrued more than four years prior to April 1, 1984 of 
      the right to recover such overcharges.  In such cases, if the owner 
      failed to produce the required rent records, the lawful stabilized rent 
      would be determined pursuant to the default procedure approved by the 
      Court of Appeals in 61 Jane Street Associates v. CAB, 65 N.Y.2d 898, 493 
      N.Y. S. 2d 455 (1985).

      However, it has recently been held in the case of J.R.D. Mgmt. v. 
      Eimicke, 148 A.D.2d 610. 539 N.Y.S. 2d 667 (App. Div. 2d Dept., 1989). 
      motion for leave to reargue or for leave to appeal to the Court of 
      Appeals denied ( App. Div. 2d Dept., N.Y.L.J., June 28, 1989, p.25, 
      col.1), motion for leave to appeal to the Court of Appeals denied (Court 
      of Appeals, N.Y.L.J., Nov. 24, 1989, p.24, col.4)., motion for leave to 
      reargue denied (Court of Appeals, N.Y.L.J., Feb. 15, 1990, p.25, col.1), 
      that the Law in effect at the time of the determination of the 
      administrative complaint rather than the Law in effect at the time of 
      the filing of the complaint must be applied and that the DHCR could not 
      require an owner to produce more than four years of rent records.

      Since the issuance of the decision in JRD, the Appellate Division, First 
      Department, in the case of Lavanant v. DHCR, 148 A.D.2d 185, 544 
      N.Y.S.2d 331 (App. Div. 1st Dept. 1989), has issued a decision in direct 
      conflict with the holding in JRD.  The Lavanant court expressly rejected 
      the JRD ruling, finding that the DHCR may properly require an owner to 
      submit complete rent records, rather than records for just four years, 
      and that such requirement is both rational and supported by the Law and 
      legislative history of the Omnibus Housing Act.

      Since in the instant case the subject dwelling unit is located in the 
      First Department, a rental history is required from June 30, 1974.  
      However, the base date rent and resulting overcharges are different from 
      those listed by the Administrator.  Section 2(i)(A)(1)(b) of the former 
      Rent Stabilization Code provides that, for apartments which were 
      decontrolled between July 1, 1971 and June 30, 1974, the Initial Legal 
      Regulated Rent "shall be the rent charged and paid on June 30, 1974."  
      The rent ledger indicates that the rent for June, 1974, was $144.25 per 
      month pursuant to a lease for that amount.  The Initial Legal Regulated 
      Rent is therefore $144.25.  Taking this into account, the Commissioner 
      has set forth the lawful stabilization rents and the amount of 
      overcharge on an amended rent calculation chart attached hereto and made 
      a part hereof. 

      The increases permitted by the Rent Stabilization Law and Code are 
      maximum rents which may not be exceeded; however, nothing therein 
      prohibits the owner from charging less than the maximum permissible 
      rent.  Thus, the N.Y.C. Conciliation and Appeals Board, the predecessor 
      to this Agency, has ruled that where an owner did not charge a tenant 
      increases permitted by the Guidelines Board, the base rent on which a 







          DK610308RO

      subsequent guidelines increase is computed may not be increased to 
      reflect prior permissible increases which the owner failed to charge 
      Collingwood Enterprises v. Gribetz, NYLJ, April 24, 1975, p.17, col.6 
      (Sup. Ct., N.Y. Co., Fine, J.).  This policy has been continued by the 
      DHCR.  In the present case the owner did not charge the tenant as much 
      in her vacancy lease as it was entitled to charge, so it waived the 
      right to base future increases on an amount larger than the $155.00 
      actually charged in that lease.  While the $155.00 rent in the 
      complainant's initial lease is lawful, since it was not more than the 
      owner was allowed to charge, there is a small monthly overcharge in 
      later leases, since the owner included a portion of the waived rent in 
      the complainant's second lease.  As was done by the Administrator, the 
      Commissioner has imposed interest on overcharges occurring on and after 
      April 1, 1984.  Interest is calculated through October 31, 1989, the end 
      of the month of the Administrator's order.

      Regarding the owner's contention that an action in contract has a 
      statute of limitations of six years, so that the rent may not be 
      recomputed more than six years prior to the filing of the tenant's 
      complaint in March, 1984: Civil Practice Law and Rules Section 213 (as 
      well as CPLR Section 213(a), which the owner has cited in other DHCR 
      cases and which provides that "[a]n action on a residential rent 
      overcharge shall be commenced within four years of such overcharge") is 
      not relevant to this proceeding since it is not an "action".  CPLR 
      Section 101 provides that" [t]he civil practice law and rules shall 
      govern the procedure in civil judicial proceedings in all courts of the 
      state and before all judges, except where the procedure is regulated by 
      inconsistent statute."  Generally speaking, the DHCR and the Courts have 
      concurrent jurisdiction to decide complaints filed under the Rent 
      Stabilization Law and Code, although the Courts will usually in the 
      first instance defer to the administrative agency in its areas of 
      expertise.  For his remedy the tenant chose the administrative agency 
      rather than the Courts.  Any resort the tenant might now have to the 
      Courts regarding the lawful rent would not be an action on the lease 
      contract, but rather a CPLR Article 78 petition against the 
      administrative agency determination.  While there is a time limit to 
      file such a legal proceeding, the time runs from the date of the 
      agency's order and not from the date of either an overcharge or of an 
      administrative complaint.

      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 
      increases.


      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 24 
      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 the Rent Stabilization Law and Code, it is


          DK610308RO


      ORDERED, that this Petition be, and the same hereby is, granted in part 
      and that the Rent Administrator's order be, and the same hereby is, 
      modified in accordance with this Order and Opinion.  The lawful 
      stabilization rents and the amount of overcharge are established on the 
      attached chart, which is fully made a part of this order.  The total 
      overcharge is $376.49 as of July 31, 1986, including excess security of 
      $3.25.  The lawful stabilization rent is $240.24 per month in the lease 
      from August 1, 1983 to July 31, 1986.


      ISSUED:



                                                                    
                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner





    

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