DL 410002-RO
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 S.J.R. NO. 5250 Court Remit
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.:
DL 410002-RO
CHERYL KEATING for
GRENTOR REALTY, INC., RENT ADMINISTRATOR'S
DOCKET NO.:
PETITIONER 36912
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ORDER AND OPINION MODIFYING COMMISSIONER'S PRIOR ORDER
AND OPINION AFTER COURT REMIT
The proceeding was originally commenced on November 16, 1984, by
the filing of an objection to the April 1, 1984 rent for housing
accommodations known as Apartment 4 at 607 East 11th Street, New
York, New York by the tenant, who took occupancy pursuant to a
one year lease which commenced March 1, 1984, at a monthly rent
of $350.00.
In the objection, the tenant stated that she had not received a
copy of the Registration. The tenant stated that the owner was
in jail, and that his partner was deceased, leaving it unclear to
whom the tenants should pay rent.
In its answer, the owner stated that it had assumed this matter
was settled when the monthly rent was reduced from $425.00 to
$416.00 effective August 1, 1988. Although requested, the owner
failed to submit prior leases from April 1, 1980 or evidence that
the apartment/building had been registered.
Accordingly, pursuant to the default procedure, in an order
issued November 2, 1989, the Administrator establish d the sta-
bilized rent at $321.00 (the tenant's initial rent of $350.00
minus the Guideline 15 allowance for a one year vacancy lease).
Because the apartment was not registered, no subsequent increases
were permitted, and the owner was directed to refund $16,529.68
in overcharges through November 30, 1989, including treble dam-
ages from April 1, 1984.
On December 11, 1989, the owner filed a Petition for Administra-
tive Review against the November 2, 1989 order.
With the Petition, the owner submitted the lease of a prior
tenant which commenced February 1, 1980 and expired January 31,
1981, at a monthly rental of $300.00. The owner stated that this
lease would establish the legal rent in 1984. The owner alleged
that the lease was not submitted previously because the lease was
in the possession of the wife of one of the principal share-
holders of the corporate owner, who was incarcerated, and the
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lease was just made available. Finally, the owner stated that
the building was now registered.
The tenant did not interpose an answer to the Petition.
On January 11, 1990, the Commissioner dismissed the Petition as
untimely, and the owner filed a petition n Supreme Court pur-
suant to Article 78 of the Civil Practice L w and Rules, chal-
lenging the Administrator's order. The proceeding was remitted
to DHCR for further consideration. The owner produced evidence
that the Petition was in fact mailed on December 5, 1989, and
based thereon, the Division consented to a remand of the pro-
ceeding.
By order issued July 10, 1990, the Commissioner recomputed the
stabilized rent from the April 1, 1980 rent reflected in the
lease submitted by the owner. The total overcharge was calcu-
lated to be $15,050.88 through November 30, 1989, inclusive of
excess security and treble damages on overcharges collected on or
after April 1, 1984.
The petitioner subsequently filed an Article 78 petition in
Supreme Court, against the July 10, 1990 order. The petition
alleged that the petitioner was the Administratrix of one of the
principal shareholders of the corporate owner, and the receiver
of the subject premises. She provided a copy of the Letters of
Administration, issued to her on December 10, 1982. The peti-
tioner alleged that the subject building had been managed by a
second principal shareholder, who had been incarcerated, and
whose wife had assumed management of the building. Since the
wife had mismanaged the building, in 1989 the petitioner herein
was appointed receiver by the Court.
The petitioner further contended that she had assumed that the
overcharge complaint had been settled; that she was unaware that
additional leases were necessary to resolve the issues; that she
now had a renewal lease that would establish that the corporate
owner had always charged the legal rent; and that treble damages
were not warranted.
In support of these contentions, the petitioner submitted a lease
extension for the period February 1, 1981 through January 31,
1984, alleging it was first made available by the hostile wife of
the other principal shareholder on August 20, 1990.
On March 13, 1991, an order was signed by Justice David H.
Edwards, Jr., remanding the proceeding to the DHCR solely to
reconsider the PAR based upon the newly-submitted lease exten-
sion agreement, and the petitioner's claim that treble damages
are not warranted under the circumstances.
The Commissioner is of the opinion that the Commissioner's prior
order should be modified.
Normally, appellate review is limited to facts or evidence pre-
sented before the Administrator. The Commissioner will accept
new evidence for the first time on appeal as an exception, where
DL 410002-RO
the owner presents a well-documented, reasonable explanation for
its failure to submit such evidence below. In the instant case,
the lease extension for the period February 1, 1981 through
January 31, 1984 is alleged to have been first made available to
the owner on August 20, 1990 by a hostile party. That allega-
tion, based on the record, is found to be credible. Accordingly,
that lease extension is accepted for the first time on appeal.
The Commissioner, therefore, has recomputed the stabilized rent
to reflect the increase for the lease period February 1, 1981
through January 31, 1984, and reduced the overcharges
accordingly. The calculations are reflected in the attached rent
chart, hereby made a part of this order.
Section 2528.4 of the Rent Stabilization Code provides that
failure to comply with the initial or annual rent registration
requirements of the Code shall bar an owner from collecting any
rent in excess of the legal regulated rent in effect on the date
the apartment became subject to the rent registration require-
ments of the Code until such registration is completed.
The owner has proffered neither explanation nor proof evidencing
an absence of willfulness in its failure to register the premises
until December 12, 1989. The necessity f care, the responsi-
bility to prevent waste of assets, did not suddenly fall on the
petitioner in September 1989, when she was appointed receiver of
the premises; it was an intrinsic part of the obligation she
undertook when, in December, 1982, she became Administratrix of
the decedent shareholder's estate; and seeing that appropriate
governmental filings, including the filing of the initial
Building/Apartment Registration in 1984 and subsequent annual
filings were made as required, was equally her responsibility.
Accordingly, the finding of willfulness, and the penalty of
treble damages, must stand for the failure to register the prem-
ises until December 1989.
The total overcharge, inclusive of treble damages for overcharges
collected on or after April 1, 1984, is $10,312.68.
The Commissioner notes that based on the Guidelines increases
alone, an overcharge exists, even considering all leases through
January 1984; however, the assessment of treble damages resulted
from the owner's failure to timely register.
This order may be filed and enforced by the tenant in the same
manner as a judgment, or not in excess of twenty percent thereof
per month may be offset against any rent thereafter due the
owner.
THEREFORE, in accordance with the Rent Stabilization Law and
Code, it is
ORDERED, that Commissioner's prior order and opinion be, and the
same, hereby is, modified in accordance with this order and
opinion.
DL 410002-RO
ISSUED:
ELLIOT SANDER
Deputy Commissioner
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