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
APPEALS OF DOCKET NOS. DJ410256RO
Gold Associates, : DISTRICT RENT OFFICE
DOCKET NOS. L3111984RT
TENANT: Dennis Ellison
PETITIONER :
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
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
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 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
apartments.
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
Administrator.
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
it
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.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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