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

     APPEALS OF                                ADMINISTRATIVE REVIEW
                                           :   DOCKET NO. DL810263RO 
               STEPHEN PASCUZZI                DRO DOCKET NO. WNR86S76R
               VINCENT VILLATA,            :   TENANT:  AARON L. CRAFTON
                             PETITIONERS   :   


     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 
     treble damages.

     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 

          DOCKET NOS.:  DL810263RO

     "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.

          DOCKET NOS.:  DL810263RO

     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:

          DOCKET NOS.:  DL810263RO

               "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 

          DOCKET NOS.:  DL810263RO

     Administrator's order be, and the same hereby is, affirmed.


                                                  JOSEPH A. D'AGOSTA
                                                  Deputy Commissioner 



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