DF610045-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
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IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. DF610045RO
Ira Sumkin, : DISTRICT RENT OFFICE
DOCKET NO. AI610485R
TENANT: Carole Brennan
PETITIONER :
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART
On June 1, 1989 the above-named petitioner-owner filed a Petition for
Administrative Review against an order issued on April 27, 1989 by the
Rent Administrator, 92-31 Union Hall Street, Jamaica, New York
concerning the housing accommodations known as 3053 Hull Avenue, Bronx,
New York, Apartment No. 1N wherein the Rent Administrator determined
that the owner had overcharged the tenant.
Subsequent thereto, the petitioner-owner filed a Petition in the Supreme
Court pursuant to Article 78 of the Civil Practice Law and Rules
requesting that the DHCR be mandated to make an expeditious
determination of the administrative appeal. The proceeding was remitted
to the Division of Housing and Community Renewal (DHCR), and the owner's
petition is herein decided on the merits.
The Administrative Appeal is being determined pursuant to the provisions
of Section 2526.1 of the Rent Stabilization Code.
The issue herein is whether the Rent Administrator's order was
warranted.
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 September,
1985 of a rent overcharge complaint by the tenant, who stated in
substance that she had commenced occupancy on December 1, 1985 at a rent
of $529.63 per month.
In a November 26, 1986 answer to the complaint, the owner stated among
DF610045-RO
other things that the prior tenant had moved in on July 1, 1985 as
superintendent at a rent of $466.11, including a $13.00 increase for
kitchen and bathroom improvements, that he died later that month; and
that the complainant's one-year lease included a 6 1/2% Guidelines
increase and 7 1/2% vacancy allowance over the prior tenant's rent.
On January 13, 1989 the owner was requested among other things to submit
leases, registrations, and copies of cancelled checks and bills to
substantiate the cost of improvements. The notice also informed the
owner that treble damages would be imposed on any overcharges found to
be willful. The only reply received was from a former owner, Jack Minc,
who stated that the owner had sent him the request, and who requested an
extension of time so he could obtain affidavits from the Rent
Stabilization Association. Such request was granted, and on March 6,
1989 Jack Minc submitted affidavits regarding registrations. The owner
did not submit any evidence regarding improvements.
On March 20, 1989 the owner was again requested to submit, among other
things, copies of cancelled checks and bills regarding improvements.
With this request was enclosed another form, differing from the January
13, 1989 form only in dates, again notifying the owner of the possible
imposition of treble damages. No reply was received from the owner.
The file also contains a Final Notice devoted entirely to the proposed
imposition of treble damages on a specific dollar amount of overcharge.
While the notice does not have a date or the Administrator's signature,
it seems likely that such notice was actually mailed on March 20, 1989
(since the tenant enclosed her copy in a March 22, 1989 submission,
along with other documents mailed to her on March 20, 1989, and since
she later enclosed a copy in answer to the owner's petition); however,
it was addressed to "Ira Sumkin/Jack Minc" at Jack Minc's mailing
address.
In an order issued on April 27, 1989 the Administrator determined an
overcharge, including treble damages, of $14,746.32 as of May 31, 1989.
In this petition, the owner contends in substance that Jack Minc was
never the managing agent for the current owner Ira Sumkin, and did not
claim to be appearing for the owner for purposes of submitting any
information other than the registration information requested in the
January 13, 1989 notice; that on March 20, 1989 the owner was for the
first time requested to submit evidence verifying the cost of equipment
and improvements; that no Final Notice regarding treble damages was ever
furnished to the owner at his place of business; that in fact the copy
of the Final Notice contained in the DHCR's files does not even have a
signature or a date; that treble damages may therefore not be imposed;
that the subject building, having been conveyed to Robert Georgens on
October 31, 1985, was conveyed to the current owner on April 4, 1986;
that upon receipt of the tenant's complaint the owner embarked upon a
responsible course of action to obtain from two prior owners rental data
which were not transferred to him at the time he purchased the premises;
DF610045-RO
that he had a good faith belief, based upon validly executed leases as
well as an unchallenged 1985 registration statement noting that the rent
had been increased by $15.00 for the installation of a refrigerator and
new stove in January, 1985, that the rent charged prior to the
complainant's occupancy was lawful; that he had no reason, until
receiving the 1989 requests for additional information, to obtain rental
data substantiating the lawfulness of the individual apartment
improvements; that he, upon receiving the 1989 requests, communicated
with the prior owners and began an investigation of the prior owners'
records; that, since the 1989 DHCR notices for the first time requested
rental data other than leases, and since the Administrator's order was
issued several weeks later, it cannot be said that the owner willfully
failed to comply with the DHCR's request to produce data which was not
in his possession or control at that time; that as a result of his good
faith efforts to obtain complete rental data prior and subsequent to the
issuance of the Administrator's order, the owner has been successful in
obtaining missing rental data from one of the prior owners; that a
January 17, 1985 invoice shows that a gas range and new refrigerator
were installed at a cost of $540.00, although the prior owner should not
have included the $355.00 cost of the range since it was used equipment;
that the prior owner also incorrectly compounded a Guidelines increase
for the tenancy of the superintendent Hector Narvez [from July 1, 1985
until his death 11 days later, a tenancy not mentioned in the
Administrator's rent calculation chart]; that extensive renovations were
done in the subject apartment at a cost of $4,645.00 beginning in
August, 1985, including the installation of a window in a windowless
kitchen, of bedroom doors, of a new floor, of sheetrocked walls, of new
cabinets, sink and fixtures in the kitchen, and of new tiles in the
bathroom; and that the Administrator's order incorrectly allows a 6%
rather than 9% increase for the lease commencing December 1, 1988. With
his petition the owner has enclosed invoices not previously submitted.
In answer, the tenant asserts in substance that her security is not in
an interest-bearing account; that the apartment registrations list C.K.
Minc as managing agent from April 1, 1985 to January 1, 1987; that the
1987 registration shows the owner as the managing agent from December 1,
1986 to November 30, 1988; that the DHCR's Final Notice shows that the
owner's address is in care of Jack Minc in Garden City; that on August
11, 1986 and January 5, 1987 she sent letters to the owner regarding
various defects; and that the owner's credibility is questionable, since
a document that he submitted to the DHCR in 1989 in a service decrease
case had a paragraph which he added after she had signed the document.
With her answer the tenant has enclosed two versions of a document which
she signed on May 30, 1989 in Docket No. CB610217S, consenting to a
restoration of the rent, but on which she wrote that she had never
received any refund or reduction in her rent.
On one of the versions (apparently a copy of one from the DHCR's files,
since a label with a new docket number of BF610058OR had been added), a
paragraph had been added stating that all conditions in the
Administrator's order had been corrected, that fuses had been replaced
with circuit breakers, and that the apartment had been painted. This
DF610045-RO
area of the document is blank on the version, with the old docket
number, which the tenant apparently photocopied before sending to the
owner to submit to the DHCR. She also enclosed an invoice for a
refrigerator or freezer which she bought on February 17, 1986, less than
three months after moving into the subject apartment (which had
supposedly had a new refrigerator installed one year previous). In
later submissions she asserts in substance that there was no working
refrigerator when she moved in; that no new cabinets were installed;
that the kitchen has old fixtures; that new tiles were installed in the
bathroom in 1989; and that she has recently been informed that the
renovation bill may have been for Apartment 1N at 3055 Hull Avenue
rather than at 3053 Hull Avenue, both buildings having previously been
owned by Mr. Minc.
The Commissioner is of the opinion that this petition should be granted
in part.
While it cannot necessarily be assumed that the owner eventually
received the treble damages notice that was addressed (and probably sent
on March 20, 1989) to Jack Minc, since the file and DHCR records provide
no real evidence that Jack Minc had any formal connection to the owner
in 1989, the owner was sent two other notices on January 13 and March
20, 1989 informing him of the possible imposition of treble damages, so
the fact that one Final Notice was addressed to Jack Minc does not
constitute adequate reason to remove treble damages.
Upon being sent a copy of the tenant's complaint in 1986, the owner
claimed an increase based on $520.00 in claimed improvements in 1985,
but did not submit any evidence of them. He also enclosed a 1985
registration containing what he later characterized as an unchallenged
listing of a $15.00 increase for a refrigerator and [used] stove.
(However, that tenant was in occupancy through June 30, 1985 at the
latest, and would have received the 1985 registration either after or
close to the time he vacated. He would have had little incentive to
challenge the increase, which was in effect for no more than four
months, so the lack of a challenge would give little reason in itself to
assume that the claimed increase was legitimate.) Aside from the
owner's own recognition in 1986 that increases based on improvements and
new equipment were at issue, the owner was sent notices on January 13,
1989 and March 20, 1989 requesting proof of the cost of improvements and
new equipment. The owner did not submit any such evidence in the
proceeding before the Administrator, although he finally submitted
documents with his June 1, 1989 appeal, five weeks after the issuance of
the Administrator's order, and four and one-half months after they were
specifically requested by the Administrator. It is well settled that an
Administrative Appeal is not a de novo proceeding but is limited, absent
good cause being shown, to the issues and evidence which were before the
Administrator. The Commissioner does not consider that the owner has
presented adequate reasons to justify acceptance of the documents
submitted for the first time on appeal. An owner is required to charge
only lawful rents, and to be able to prove their lawfulness, a proof
DF610045-RO
that is not accomplished simply by assuming that rents "inherited" from
a previous owner are lawful.
While the owner claims that the prior owner incorrectly compounded a
Guidelines increase for the tenancy of the former superintendent, his
12-day occupancy is not considered a genuine tenancy, and no increase of
any kind is allowed for it. The former owner also appears to have
charged the complainant a 6 1/2% Guideline increase and 7 1/2% vacancy
allowance over the superintendent's rent. In actuality, a 4% Guidelines
increase applies to her one year lease. By the terms of Guideline 17
there is no vacancy allowance since one was taken in Guideline Period 16
for the Sanchez lease, and the increase is calculated on the $407.75
rent in the Sanchez lease commencing February 28, 1985 since the 12-day
occupancy of the superintendent in July, 1985 is ignored. However, the
owner is correct that the tenant had a two-year lease commencing
December 1, 1988. Taking the aforementioned factors into account, the
Commissioner has recalculated the lawful stabilization rents and the
amount of overcharge. They are set forth on an amended rent calculation
chart attached hereto and made a part hereof. The Commissioner notes
that, while those rents are the lawful permanent rents, the actual rents
collectible for some periods may be lower if there are of one or more
rent reduction orders resulting from service decreases.
With respect to interest on her security deposit, the tenant may wish to
contact the New York State Department of Law ("Attorney General's
Office").
The Commissioner has determined in this Order and Opinion that the owner
collected overcharges of $14,092.44. 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 the
overcharge, or where the tenant files this Order as a judgment, the
County Clerk may add to 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.
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 lawfful
increases.
DF610045-RO
THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
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 the rent overcharge are
established on the attached chart, which is fully made a part of this
order. The total overcharge is $14,092.44 as of April 30, 1989,
including excess security of $125.43.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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