DL210093RO
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 (SJR 7387 - Mandamus)
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: DL210093RO
Jack Welner, DRO DOCKET NO.: 58388
TENANT: Ramona Colon
PETITIONER
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART AND MODIFYING ADMINISTRATOR'S ORDER
On December 19, 1989 the above-named petitioner-owner filed a Petition for
Administrative Review against an order issued on November 14, 1989 by the
Rent Administrator, 92-31 Union Hall Street, Jamaica, New York concerning
the housing accommodations known as Apartment 4R at 954 Manhattan Avenue,
Brooklyn, New York wherein the Rent Administrator determined that the owner
had overcharged the tenant.
The issue in this appeal is whether the Rent Administrator's order was
warranted.
The applicable sections of the Law are Section 26-516 of the Rent
Stabilization Law and Section 2526.1 (a) of the Rent Stabilization Code.
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 August, 1985 of
a Tenant's Objection to Rent/Service Registration by the tenant, in which
she stated that she had commenced occupancy on April 1, 1983 at a rent of
$275.00 per month, and that she had received the 1984 registration in an
envelope postmarked July 26, 1985.
In a reply dated August 10, 1988 the owner stated among other things that
the tenant had paid no rent since 1985.
In answer, the tenant's attorney made a submission regarding rents actually
paid by the tenant.
On February 3, 1989 the owner was informed of the possible imposition of
treble damages, and on June 13, 1989 he was informed of their proposed
imposition.
In an order issued on November 14, 1989 the Rent Administrator, using a
DHCR default procedure since the owner had not furnished a rental history
from April 1, 1980; listing the tenant as having paid $275.00 per month
from April 1, 1983 to March 31, 1989; freezing the lawful rent during the
DL210093RO
entire period; and imposing treble damages, found an overcharge of
$21,230.00 through March 31, 1989. The order incorrectly listed the
owner's last name as Weiner rather than Welner. The order also stated that
the owner had submitted a copy of the 1985 registration but had failed to
submit proof that the building was properly registered in 1984.
In this petition, the owner contends in substance that he purchased the
building in 1984; that he was unable to file 1984 registrations until 1985;
that he filed the 1984 registration for the subject apartment on July 26,
1985; that he was first served with the registration objection on August
10, 1988; that the objection although dated August 20, 1985, bears no
official date stamp by the DHCR to show that it was timely filed within 90
days of the mailing of the notice to the tenant, so it must be deemed
untimely, and the registered April 1, 1984 rent of $275.00 therefore
becomes the legal regulated rent; that, pursuant to the new operative law,
the owner was not required to produce any rent records for more than four
years prior to the most recent registration; that, at the time of the
Administrator's November 14, 1989 order the DHCR had rent data for four
years prior to the 1989 registration, so the owner was not in default; that
the tenant did not pay all the rents calculated by the Administrator; that
there is no proof that the amounts agreed to in stipulations were actually
paid, or that the December 16, 1988 check for $10,097.50 tendered to the
owner actually reflected the tenant's proportionate share of rent arrears
owed from January through December, 1988; that the tenant's attorney
concedes that the tenant has not tendered any rent since December, 1988;
and that it has been conceded by the tenant and her attorney that since
November 1, 1985 she was directed to pay only $225.00 per month due to rent
reduction orders, although such orders were all facially defective since
they directed a reduction to the level in effect prior to the most recent
Guidelines adjustment and since the owner was not provided a rental history
of the apartment at the time he purchased the building.
In answer, the tenant asserts in substance that Section 2523.7 of the
current Rent Stabilization Code requires an owner to continue to maintain
records of apartments concerning which a challenge to the initial
registration has been filed until a final order of the DHCR is issued; that
the owner offers no evidence that the objection was not timely filed in
August, 1985; that DHCR's failure to stamp the objection cannot be held
against the tenant; that the owner has never stated in a sworn statement
that the rent arrears agreed to in the stipulations were not paid; that the
owner has never, even in a subsequent non-payment proceeding, sued for
rents prior to October, 1985; that the tenant has receipts for October and
November, 1985; that the owner on March 15, 1986 acknowledged the receipt
in court of $3,037.50 from the tenant; that the December 15, 1988
stipulation stated that the tenant owed $3,687.50, and that the stipulation
satisfied all claims for rent through December, 1988; that the tenant began
paying $225.00 a month because of three rent reduction orders, which were
not appealed by the owner; that the 7% Guideline increase for April, 1983
was deducted for each of the rent reduction orders, since the last
Guideline increase before those orders was in April of 1983 and since the
order in effect at that time allowed a 7% increase; and that the three
orders should actually be applied to $165.00 rather than $275.00, thus
lowering the rent to $135.00, since to do otherwise would mean the owner
was not being penalized for failing to maintain services.
The Commissioner is of the opinion that this petition should be granted in
part, and that the Administrator's order should be modified.
While the DHCR did not date-stamp the tenant's objection, which was dated
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August 20, 1985 (more than two months prior to the deadline for objecting
to the initial registration, which was mailed to the tenant on July 26,
1985), and while the owner was not mailed a copy until August 10, 1988, an
entry in the Progress Report-Tracking sheet of the DHCR employee initially
assigned the case indicated that she screened the objection on October 21,
1985. This was within the 90 days, so the objection was certainly
submitted within 90 days of the initial registration.
The tenant is correct that the four-year limit on rent records was tolled
once a challenge to the initial registration was filed.
The Commissioner notes that the December 15, 1988 stipulation stated that
"[Petitioner shall accept this sum to satisfy all rent through 12/88
provided that if DHCR determines the legal rent for the subject premises is
other than $225.00 a month this agreement shall be adjusted accordingly,"
and the Commissioner finds pursuant to all the evidence in the record that
the tenant paid $275.00 per month through October, 1985, and $225.00 per
month thereafter. However, the December 16, 1988 check for $10, 097.50 for
the arrears of several tenants did not include payment in full for all
rents due through December 31, 1988, since the stipulation made the day
before, accepting $4,387.50 as payment in full of all rent due for the
subject apartment, required the tenant to pay only $3,687.50 "forthwith,"
with the remaining $700.00 to be paid "when all violations are corrected."
There is no evidence that the $700.00, representing 3 1/9 months of rent at
$225.00, was paid after December 16, 1988. Overcharge calculations are
therefore stopped at September 27, 1988, 3 1/9 months prior to December 31,
1988.
Section 2523.4(a) of the Rent Stabilization Code provides among other
things that:
A tenant may apply to DHCR for a reduction of the legal regulated
rent to the level in effect prior to the most recent guidelines
adjustment, and the DHCR shall so reduce the rent for the period
for which it is found that the owner has failed to maintain
required services. The Order reducing the rent shall further bar
the owner from applying for or collecting any further increases
in rent until such services are restored.
There have been at least three orders reducing the rent for service
decreases, with the earliest effective date of decrease being November 1,
1985. The Administrator's order reduced, and froze, the lawful rent
beginning more than two years prior to that, to a level less than would be
obtained by removing Guidelines, or even Guidelines and vacancy increases,
from the $275.00 rent being charged the tenant prior to November 1, 1985.
The Commissioner does not consider any further decreases to be warranted,
or supportable by the Code, under the present facts, although the
Commissioner notes that the collectible rent remains frozen at $165.00
until the owner obtains DHCR orders restoring the rents for all rent
reduction orders, and that the Compliance Unit of the DHCR may also impose
sanctions if the owner does not restore services. (The permanent rent may
increase after March 31, 1989, the end of the last lease considered in the
Administrator's order, although the owner may never, even retroactively,
collect more than $165.00 per month for the period for which the
collectible rent is frozen due to one or more reduction orders based on
service decreases.) While it does not affect the present case, since the
rent reduction orders do not reduce the collectible rent below the lawful
rent established by the Administrator, the parties are advised that rent
DL210093RO
reduction orders are not cumulative. Once an order has reduced the rent
for a service decrease, additional rent reduction orders overlapping the
time period in the first order do not result in further reductions, but
just form independent bases for continuing the rent reduction until orders
have been issued restoring the rents in all rent reduction orders.
The Administrator's order is also modified to state the owner's name as
Jack Welner, and to correct the statement about submitting the 1985
registration to show that the owner filed the 1984 registration for the
subject apartment on July 26, 1985.
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 $13,980.00. 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.
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 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 fully made a part of this order.
The total overcharge is $13,980.00 as of September 27, 1988, including
excess security of $110.00.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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