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    
      --------------------------------X                             


            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 


          DL210093RO

      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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