OFFICE OF RENT ADMINISTRATION
                                   GERTZ PLAZA
                             92-31 UNION HALL STREET
                             JAMAICA, NEW YORK 11433

      APPEALS OF                             DOCKET NOS. DJ410256RO
           Gold Associates,               :  DISTRICT RENT OFFICE
                                             DOCKET NOS. L3111984RT
                                             TENANT: Dennis Ellison          
                            PETITIONER    : 

                                     IN PART

      On October 23, 1989, the above-named petitioner-owner filed a Petition 
      for Administrative Review against an order issued on September 18, 1989, 
      by a Rent Administrator, concerning the housing accommodations known as 
      42 West 57th Street, New York, New York, Apartment No. 2F, wherein the 
      Rent Administrator determined the fair market rent pursuant to the 
      special fair market rent guideline promulgated by the New York City Rent 
      Guidelines Board for use in calculating fair market rent appeals.

      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 Administrative Appeal is being determined pursuant to the provisions 
      of Section 26-513 of the Rent Stabilization Law.

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

      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 in March 1984 by the tenant's 
      filing of a fair market rent adjustment application.  The tenant took 
      occupancy as the first stabilized tenant pursuant to a lease commencing 
      October 1, 1978 and expiring September 30, 1980 at a monthly rent of 
      $285.00.  The current owner was served with a copy of the application 
      and was afforded an opportunity to submit rent data for comparable 

      The owner submitted a rent roll listing the rents of all apartments in 
      the building on January 1, 1980 as its comparability data, contending 
      that it need not submit records dating back more than 4 years from the 
      complaint, in accordance with the case of J.R.D. v. Eimicke.  The owner 
      also stated that the tenant purchased the allocated shares to the 
      apartment on October 15, 1984.

      In Order Number L3111984RT, the Rent Administrator adjusted the initial 
      legal regulated rent by establishing a fair market rent of $216.99 
      effective October 1, 1978, the commencement date of the initial rent 
      stabilized lease.   The Rent Administrator also directed that the owner 
      refund excess rent of $6,401.10 to the tenant.

      In this petition, the owner contends in substance that the Administrator 
      erred by not prorating the excess rent between the former owner and 
      itself and that the tenant purchased the Apartment on October 29, 1984, 
      and all determined excess rent should not have been calculated after 
      that date.  The owner stated that it only purchased the building on 
      September 25, 1981, and that the former owner was responsible for any 
      excess  rent collected prior to that date.  No proof establishing when 
      the owner purchased the subject premises was submitted.
      However, the owner also contends that there was no excess rent because 
      its rent roll of January, 1980 shows that the other rents in aparments 
      in the subject line were comparable, and should have been considered by 
      the Administrator.  Enclosed with this petition were several leases for 
      allegedly comparable apartments that were not submitted to the 

      In response, the tenant states, inter alia, that the owner is required 
      to assume liabilities of any former owner, known or unknown, when it 
      purchases a property.

      The Commissioner is of the opinion that this petition should be granted 
      in part.

      Section 26-513 of the Rent Stabilization Law provides, in pertinent 
      part, that fair market rent adjustment applications are to be determined 
      by the use of special fair market rent guidleines orders promulgated by 
      the New York City Rent Guidelines Board and by the rents generally 
      prevailing in the same area for substantially similar housing 
      accommodations.  In order to determine rents generally prevailing in the 
      same area for subtantially similar housing acommodations, it is DHCR's 
      procedure for fair market rent appeal cases filed prior to April 1, 1984 
      to allow owners to submit June 30, 1974 fair market rental data for 
      complete lines of apartments, beginning with the subject line.  The 
      average of such comparable rentals will then be updated by annual 
      guidelines increases.  Alternatively, DHCR procedure allows owners to 
      have comparability determined on the basis of rents charged after June 
      30, 1974.  In order to use this method, owners were required prior to 
      November 1, 1984 to submit rental history data for all stabilized 
      apartments in the subject premises and subsequent to November 1, 1984 to 

      submit such data for complete lines of apartment beginning with the 
      subject line.  Post June 30, 1974 rent data will be utilized if the 
      comparable apartment was rented to a first stabilized tenant within 
      one year of the renting of the subject apartment and if the owner 
      submits proof of service of a DC-2 Notice or apartment registration form 
      indicating that the rent is not subject to challenge.

      The record in this case established that the owner was properly advised 
      of the documentation needed for useable comparability data, but failed 
      to submit it.  Specifically, no proof was submitted of service of the 
      DC-2 Notice or apartment registration on the tenants of the comparable 
      apartments, thereby leaving the initial rents still open to challenge.

      With regard to the claim that the owner does not need to retain records 
      prior to 4 years before the filing of an overcharge complaint, and, 
      therefore, should have its comparability data accepted by the 
      Administrator, the Commissioner is of the opinion that JRD v. Eimicke, 
      148 A.D. 2d 667 (App. Div. 2d Dept., 1989), is not applicable to this 
      proceeding.  The change effected by Section 14(g) of the Omnibus Housing 
      Act and Section 26516(g) of the Rent Stabilization Law, as applied in 
      the JRD case, only involves rent overcharge proceedings, and does not 
      apply to fair market rent appeals.  Section 26-513 of the Rent 
      Stabilization Law, which deals with fair market rent appeals, continues 
      to provide for determination of fair market rent appeals from the date 
      of the initial stabilized tenancy.  Additionally, the Commissioner notes 
      that the JRD case is applicable in the Second Department only.  This 
      proceeding is in the first Department where the case of Lavanant v. 
      DHCR, 148 A.D. 2d 185, 544 N.Y.S. 2d 331 (App. Div. 1st Dept., 1989) is 
      the determinative authority.

      With regard to the owner's contention that the excess rent refund should 
      be allocated between it and a prior owner, it is noted that the owner 
      failed to indicate during the proceeding before the Administrator that 
      the owner had acquired the subject building after the tenant took 
      occupancy.  Morever, the owner has submitted no proof to establish when 
      in fact 
      acquired the subject premises.

      However, the owner is not responsible for refunding excess rent after 
      the tenant purchased the subject apartment.  Accordingly, the petitioner 
      is responsible for the excess rent collected from October 1, 1978 
      through October 31, 1984, when the tenant became owner of the apartment, 
      not including excess security, for a total of $5499.42. 

      This order and opinion is issued without prejudice to the rights of the 
      owner herein to proceed against the former owner in a court of competent 
      jurisdiction for any excess rent collected by the former owner. 

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

      ORDERED, that this petition for administrative review be, and the same 
      hereby is, granted in part, and, that the order of the Rent 
      Administrator be, and the same hereby is, modified in accordance with 
      this order and opinion.


                                        JOSEPH A. D'AGOSTA
                                        Deputy Commissioner


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