DC410336RO
                                    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. DC410336RO

            Gershon & Co., Inc.,              :    DRO DOCKET NO. 3123102RT
                                                                  CDR34732
                                                   TENANTS: Michael & Mary
                                                            Donovan
                               PETITIONER     :
          ------------------------------------X

            ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW 
                         AND MODIFYING ADMINISTRATOR'S ORDER

          On March 30, 1989 the above named petitioner-owner filed a Petition 
          for Administrative Review against an order issued on February 23, 
          1989 by Rent Administrator, 10 Columbus Circle, New York, New York 
          concerning housing accommodations known as Apartment 35 at 461 Fort 
          Washington  Avenue,  New  York,  New  York   wherein   the   Rent
          Administrator determined that the owner had overcharge the tenants.

          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
          provision in effect in 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 in this appeal is whether the Rent Administrator's order 
          was warranted.

          This proceeding was originally commenced by filing in March, 1984 
          of both a rent overcharge complaint and a fair market rent appeal 
          by the tenants, in which they  stated  that  they  had  commenced
          occupancy on September 25, 1983 at a rent of $450.00 per month.

          The owner was sent copies of both documents, which were processed 
          in the same proceeding.  The owner submitted a full rental history 
          from the base date.

          In an order issued on February 23, 1989 the Administrator dismissed 
          the fair market rent adjustment application, since the rent of the 
          initial stabilized tenant had been determined in a prior proceeding 
          to be lawful, and found an overcharge of $3,576.17 as of September 












          DC410336RO

          30, 1988.

          In this petition,  the  owner  contends  in  substance  that  the
          Administrator listed a 5%, rather than 15%, vacancy allowance  in 
          Guideline Period 12A; that, while the order does not give a basis 
          for stating that "if the rent charged is less than the rent  with
          maximum permitted increases, the  lawful  stabilization  rent  is
          limited to the rent charged," utilization of the correct increase 
          would not raise the maximum lawful rent  above  the  actual  rent
          charged; that the tenants' original complaint was  limited  to  a
          claim that "[t]he landlord is charging rent for a period of  time
          when the apartment was still being worked on" in September, 1983; 
          that it would be an abuse of discretion to process  the  tenants'
          specific complaint as if it were  a  complaint  of  general  rent
          overcharge; that the tenants' fair market rent appeal was properly 
          dismissed; that the specific issue on which the tenants requested 
          a determination was not addressed or determined in the order; and 
          that new evidence must be presented on the issue complained of.

          In answer, the tenants assert in substance that their complaint was 
          also about the amount of rent being charged; that they also filed 
          an objection to the initial registration; and that they should not 
          have to pay an increase for new appliances, which they either never 
          received or which have been defective recently. With their answer 
          they have enclosed a copy of a Tenant's Objection to Rent/Services 
          Registration, dated July 30, 1984, in which they state that  they
          received the initial registration in June,  and  that  they  were
          making a fair market rent appeal.  [This was later docketed as No. 
          000015570.  On March 28, 1986 the parties were notified  that  it
          would also be processed as Docket No. U3123102R/T.]

          In response, the owner contends  in  substance  that  any  claims
          regarding the installation of new equipment must  be  disregarded
          since the tenants did not  file  a  Petition  for  Administrative
          Review.

          The Commissioner is of the opinion that the owner's petition should 
          be denied.

          Whether or not the tenants' overcharge complaint was one of general 
          or specific overcharge, the fair market rent appeal filed at  the
          same time and processed under the same docket number constituted a 
          challenge to the lawfulness of the rent.  While it turned out that 
          the complainants were not the first stabilized  tenants,  it  was
          proper for the Administrator to continue processing the appeal as 
          an overcharge complaint.  The owner was afforded a full opportunity 
          to prove the lawfulness of the rents charged, and in fact submitted 
          a full rental history from the base date.

          The 5% vacancy allowance listed on the Administrator's chart  was
          just a typographical error that did not affect the  calculations.
          If the Administrator had actually used that figure, the lawful rent 






          DC410336RO

          in the prior tenant's 1981 lease would have been $278.40.  Actual 
          use of the 15% figure meant that the owner could have charged up to 
          $302.40.  The owner actually charged  $295.00.   It  has  been  a
          longstanding policy of the rent agency that an owner is deemed to 
          have waived the difference between the rent charged and a  higher
          possible lawful rent, even if  the  lower  rent  was  charged  by
          mistake.  An owner cannot recoup a previously waived rent increase. 
          Collingwood Enterprises v. Gribetz, N.Y.L.J., April 24, 1975,  p.
          17, col.6, (Sup. Ct., N.Y. Co., Fine, J).  The Administrator  was
          therefore correct in determining a lawful rent  of  $295.00  from
          August 15, 1981 to August 31, 1982.

          Since the Administrator did not look into the  question  of  rent
          paid, or credited, for the last half of September, 1983, the owner 
          was requested on March 18, 1994 to submit evidence that the tenants 
          received one-half month credit.  In reply, the owner stated that it 
          could not find rental audits/history from 1983, so an  additional
          one-half month at present rent was being credited.  It enclosed a 
          copy of a computer printout showing a credit of $316.71 in March, 
          1994.  What the owner has effectively done is to accept that  the
          tenants paid rent for September 15 to 30,  1983,  and  that  they
          should not have  had  to  pay  anything  for  that  period.   The
          Administrator's order calculated the tenants as paying $225.00 for 
          that period, with $24.34 of that being  an  overcharge.   If  the
          $316.71 recently credited is applied against that $225.00, it means 
          that the tenants effectively started paying rent  on  October  1,
          1983, rather than September 15, 1983, so $24.34 worth of overcharge 
          for the half-month is eliminated.  Since the owner  has  credited
          $316.71 rather than $225.00, the remaining over-charge is reduced 
          by an additional $91.71,  becoming  $3,460.12  (including  excess
          security of $57.84) as of September 30, 1988 rather than $3,576.17 
          as calculated by the Administrator.


          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.

          The Commissioner has determined in this Order and Opinion that the 
          owner collected overcharges of $3,460.12.  This Order  may,  upon
          expiration of the period for seeking review  of  this  Order  and
          Opinion pursuant to Article Seventy-eight of the Civil Practice Law 
          and Rules, be filed and enforced as a judgment or not in excess of 
          twenty percent per month of the overcharge may be offset  against
          any rent thereafter due the owner.  Where the tenant credits  the
          overcharge, the tenant may add to to the overcharge, or where the 
          tenant files this Order as a judgment, the County Clerk may add to 












          DC410336RO

          the overcharge, interest at the rate payable on a judgment pursuant 
          to Section 5004 of the Civil Practice  Law  and  Rules  from  the
          issuance date of the Rent Administrator's Order to  the  issuance
          date of the Commissioner's Order.

          THEREFORE, in accordance with the Rent Stabilization Law and Code, 
          it

          ORDERED, that this petition be, and the same hereby is, denied and 
          that the Rent Administrator's order be, and the same  hereby  is,
          modified in accordance with this Order and Opinion.   The  lawful
          stabilization rent is $476.81 per month in the  lease  commencing
          October 1, 1986.  The total remaining overcharge is $3,460.12 for 
          the period through September 30, 1988.

          ISSUED:




                                        ------------------------------------- 
                                         JOSEPH A. D'AGOSTA
                                         Deputy Commissioner     











    

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