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STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE :
APPEALS OF ADMINISTRATIVE REVIEW
: DOCKET NO. DL810263RO
STEPHEN PASCUZZI DRO DOCKET NO. WNR86S76R
VINCENT VILLATA, : TENANT: AARON L. CRAFTON
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On December 26, 1989, the above-named petitioner-owners filed a Petition
for Administrative Review against an order issued on November 22, 1989, by
the Rent Administrator, 55 Church Street, White Plains, New York,
concerning housing accommodations known as Apartment 2B, 48 First Street,
New Rochelle, New York, wherein the Rent Administrator determined that the
tenant had been overcharged and ordered a refund of $10,116.60, including
The issues in this appeal are whether the tenant was overcharged; and if
so, whether treble damages were appropriate.
The applicable sections of the Tenant Protection Regulations (TPR) are
Sections 2506.1 and 2509.
The Commissioner has reviewed all of the evidence in the record and has
carefully considered that portion of the record relevant to the issues
raised by the administrative appeal.
The tenant commenced this proceeding on July 29, 1986 by filing an
overcharge complaint, alleging that he had taken occupancy on January 1,
1973 at a rent of $175.00 per month; that his March 31, 1980 rent was
$220.00 and that his then current (June 15, 1986 - June 14, 1987) lease
rent was $249.10 based on a "change in ownership plus Guidelines
increases." In addition, the tenant alleged he was paying an additional
$50.00 per month for parking. The tenant contended that the correct 1986-
7 rent should be $233.20, but that the new owners had used a prior rent of
$235.00 rather than $220.00 because the "present owner claims the prior
owner stated my rent as $235.00."
In answer to the complaint, the owners stated that the subject building
had been purchased in August, 1985 and that the prior owner had
represented that the tenant's lawful rent was $235.00. Attached to this
answer is a purported copy of page two of the contract for the subject
building in which the complaining tenant's rent is listed as $235.00.
The owners added that the tenant had been paying them $220.00 rather than
$235.00 because that was "all he would pay" so that the owners were
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"unable to collect" the full $235.00.
In a reply dated March 18, 1987, the tenant submitted leases showing that
the 1973 rent of $175.00 had increased to $220.00 by 1979. He alleged
that no further increases occurred. He further alleged that in February,
1983 the City of New Rochelle took title to the building and that he paid
the City $150.00 per month until the former owner regained title in
January of 1985. At that time the prior owner's attorney told the tenant
that the rent was $235.00 and threatened the tenant with eviction if the
full amount was not paid. The tenant alleged that he paid $235.00 per
month from January 8, 1985 through July 15, 1985.
When the petitioners bought the building the tenant alleges he paid them
$220.00 per month from August 28, 1985 to May 15, 1986 at which time a
rent increase was "granted by the Board," presumably the Westchester
County Guidelines Board. The tenant's contention was that that increase
should have been based on a prior rent of $220.00 rather than $235.00
which the petitioners used.
In a response dated May 12, 1988, the petitioners noted, through their
attorneys, that the tenant had admitted paying the prior owner $235.00 per
month during the first half of 1985, adding that: "When the present
owners took title the tenant's rent was reduced from $235.00 per month to
$220.00 a month." The petitioners contend that the tenant was never
overcharged but that if the prior owner had overcharged the tenant the
present owners should not be responsible, especifically in view of the
tenant's own admission that "the present owners reduced the tenant's rent
upon taking title by $15.00 per month."
In Order Number WNR86S76R, herein under review, the Rent Administrator
determined that because the apartment had not been initially registered,
the 1985 annual registration showing a rent of $235.00 notwithstanding,
the rent of $220.00 for the apartment and $20.00 for two parking spaces
could not be increased. Overcharges were computed therefrom and treble
damages were imposed.
The Administrator further ordered that the rent should remain at $220.00
plus parking until the owners file all required registrations and offer
the tenant the option of a one or two year lease above the $220.00 rent.
In this petition, the owners contend that the Rent Administrator's Order
is incorrect and should be modified because the City of New Rochelle had
taken ownership of the subject building from the prior owner from February
of 1983 through December of 1984. Therefore, the $235.00 rent first
charged to the tenant by the prior owner after reassuming ownership at the
end of 1984 should be the initial legal rent.
Furthermore, the petitioners took title to the subject premises on August
16, 1985 and subsequently submitted an Annual Registrations form for 1985
showing a rent of $235.00 on April 1, 1985. The petitioners state that
the tenant never objected to this registered rent, implying that the 1985
registered rent should have therefore been used by the Administrator as
the base rent and therefore there was no overcharge.
In addition, the petitioners argue that the tenant actually owes them
$150.00 for the ten month period when he paid them $220.00 rather than
$235.00 for the apartment.
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The petitioners submit proof that the seller represented the subject
apartment rent as $235.00. Regarding the parking they merely state that
"upon information and belief the sum of $35.00 per month per space was
represented [as the true rent] by all of the persons involved in the
acquisition of title by the [petitioners]."
Based on the above, the petitioners argue that even if there was an
overcharge it was not willful and therefore treble damages were
In answer to this petition, the tenant contends that the order should be
upheld because the tenant had only paid $235.00 to the prior owner after
it reacquired ownership from the City under protest due to threat of
eviction by the owner's attorney. Subsequent leases were signed even
through the tenant felt the rents therein were illegal, since the tenant
had already filed an overcharge complaint. In short, the tenant argues
that payment of rents otherwise illegal should not act as a waiver of his
right to a lawful stabilized rent.
Regarding the 1985 Registration, the tenant alleges he was never served
with a copy of the owner's registration of the subject premises.
While conceding that the petitioners did serve a notice of rent increase
when his rent was raised from $235.00 to $249.10, he contends that that
notice was pursuant to "increases [which] were granted by the Guidelines
Board" whereas the increase from $220.00 to $235.00 "was not granted by
the Guidelines Board." The tenant contends that his cancelled checks
prove that the Guidelines Board granted no increases to the subject
building from April 14, 1983 until May 13, 1986.
The tenant submits copies of notices from the petitioners to all tenants
at the subject building raising the parking charge to $25.00 as of
September 1, 1985 and $35.00 as of December 1, 1986. The tenant argues
that these notices belie the petitioners' allegation that the initial
parking rent had been $35.00 and also prove the willfulness of the
As further proof of the alleged willfulness of the overcharges the tenant
submit a copy of an August 1989 notice raising the tenant's rent by either
6% for a one year lease or 9% for a two year renewal. The tenant argues
that these proposed increases were illegal and willful since the
petitioners knew of the overcharge complaint which was pending when the
notice was sent.
The Commissioner is of the opinion that this petition should be denied.
Section 2509.1(c) of the TPR requires that accommodations which become
subject to the ETPA after the initial registration period must be
registered within 90 days of the date they became subject. The
instructions for the 1985 Annual Registration clearly informs an owner of
his or her obligation to file an initial registration on forms different
from the 1985 registration forms which the petitioners submitted to the
Administrator and on appeal.
Section 2509.3 of the TPR provides:
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"The failure to file a proper and timely initial or
annual rent registration statement as required by this
Part shall, until such time as such registration
statement is filed, bar an owner from applying for or
collecting any rent in excess of the legal regulated
rent in effect on the date of the last preceding
registration statement or, if no such statements have
been filed, the legal regulated rent in effect on the
date that the housing accommodation became subject to
the registration requirements of this Part. The
filing of a late registration shall result in the
prospective elimination of such sanctions."
Since the prior owner's increase of the rent from $220.00 to $235.00 was
not pursuant to a lease it was invalid. Furthermore, the tenant's payment
of that amount did not constitute a valid waiver. See TPR Section
2500.12. Furthermore, in the absence of an initial registration (whose
rent could only be challenged within 90 days of registration), the
tenant's 1986 overcharge complaint was a valid challenge of the $235.00
rent stated in the 1985 Annual Registration. This is true whether or not
the 1985 Annual Registration had been served on the tenant. Therefore,
the Administrator was correct in not using $235.00 as the legal regulated
rent. Because the subject premises had not been initially registered the
Administrator correctly froze the rent.
TPR Section 2506.1 requires the Division to impose treble damages on an
overcharge unless the owner "establishes by a preponderance of the
evidence that the overcharge was neither willful nor attributable to his
negligence." The petitioners have clearly failed to meet this burden of
proof. The Rent Stabilization system is largely self-regulatory. A new
owner can not rely on the representations of a prior owner as to the
legality of any rent. Instead, a new owner has an affirmative duty to
determine whether the rents being charged are lawful.
The Commissioner notes that the bulk of the overcharges found by the
Administrator were for the parking. The notices of increase in garage
rents show that these overcharges were not based on representations by the
prior owner. Since these increases were uniform throughout the building,
they constituted clear violations of ETPA by not conforming to Guidelines
The owners are hereby directed to immediately refund the amount $10,116.60
to the tenant. If they fail to do so, the tenant may recover the penalty
found herein by deducting it from the rent payable to the owners at a rate
not in excess of 20 percent of the amount of the penalty for any one
month's rent. If no such offset has been made, this order may, upon the
expiration of the period in which the owners may institute a proceeding
pursuant to Article 78 of the Civil Practice Law and Rules, be filed and
enforced by a tenant in the same manner as a judgment.
This Order is without prejudice to the owners' right to proceed against
the prior owner in a court of competent jurisdiction.
THEREFORE, in accordance with the Emergency Tenant Protection Act and
Regulations, it is
ORDERED, that this petition be, and the same is, denied, and that the Rent
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Administrator's order be, and the same hereby is, affirmed.
JOSEPH A. D'AGOSTA