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
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IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. DK610308RO
: DRO DOCKET NO. ZB3101441RT
Combined Associates,
TENANT: Joseph Garvin
PETITIONER :
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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.
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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
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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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