DOCKET NO.: EF710339RO
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 :
APPEAL OF ADMINISTRATIVE REVIEW
: DOCKET NO. EF710339RO
RITA CAPOCCIAMO, DISTRICT RENT ADMINISTRATOR'S
: DOCKET NO. ED710011R
PETITIONER
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW IN PART
On June 23, 1990, the above-named petitioner filed a petition for administra
tive review of an order issued on June 7, 1990 by a Rent Administrator
concerning the housing accommodation known as Apartment 616, 630 Shore Road,
Long Beach, New York.
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 petition for administrative review.
This proceeding was commenced by the filing of a rent overcharge complaint,
dated April 3, 1990, by the sub-tenants of the subject apartment. In their
complaint the sub-tenants asserted, among other things, that:
1) They commenced occupancy in the subject apart
ment on December 15, 1988 at a monthly rent of
$775.00;
2) The subject apartment was unfurnished;
3) The prime tenant, Rita Capocciamo, is an
illusory prime tenant as she has never lived
in the subject apartment;
4) The sub-tenants "should be given all rights of
prime tenant";
5) The sub-tenants had to pay $1,162.00 to the
broker, Greater South Shore Sales & Resales
Corporation (also referred to in this proceed
ing as South Shore Realty);
DOCKET NO.: EF710339RO
6) The $1,162.00 consisted of: a commission equal
to one-month rent and a one-half month "man
agement fee";
7) The collection of the above-mentioned "manage
ment fee" by the broker, as alleged by the
sub-tenants, was illegal, and
8) The sub-tenants were informed that the afore
mentioned broker would be collecting the rent
money.
To their complaint the sub-tenants attached, among other things, the
following:
1) A copy of the sub-tenants' initial lease with
the prime tenant, Rita Capocciamo, dated
December 9, 1988, commencing on January 15,
1989 and expiring on January 31, 1990 at a
monthly rent of $775.00;
2) A copy of the sub-tenants' renewal lease,
commencing on February 1, 1990 and expiring on
January 31, 1992 at a monthly rent of $845.00
per month;
3) A copy of a receipt, dated December 5, 1988,
stamped by the broker, the Greater South Shore
Sales & Resales Corporation, which indicated
payment by the sub-tenants in the amount of
$1,162.00 to the above-mentioned broker, and
4) A copy of a receipt, dated December 12, 1988,
which indicated that the sub-tenants paid rent
in the amount of $387.50 for the period con
sisting of December 15, 1988 through December
31, 1988, and the payment of one-month
security in the amount of $775.00.
On May 14, 1990, the sub-tenants submitted to the rent agency a copy of a
letter written to them by Rita Capocciamo, dated April 19, 1990. The above-
mentioned letter stated, among other things, that:
Enclosed, please find two money orders, one for $711.25
and one for 141.26, which represents the total amount of
dollars overcharged on your rent in error...The total
overcharge was $852.51, the same total as the combined
dollar amount of the money orders.
As of May 1, 1990 the rent you will pay me is $769.75,
and will be so until your lease expires. Since I am out
of town most of the time, please continue to leave the
DOCKET NO.: EF710339RO
rent checks at South Shore Realty as you have done in the
past.
On May 18, 1990, the Administrator mailed a notice to the subject owner,
Paulsen Real Estate Corporation, directing it to submit to the rent agency "a
copy of the prime tenant's (Rita Capocciamo's) initial lease, the prior
tenant's lease and any letter, or copies of sublease agreements given to you
by the prime tenant." The above-mentioned notice also directed the subject
owner to "describe the relationship between South Shore Realty and Paulsen
Real Estate Corporation," and to explain why South Shore Realty has been
collecting the sub-tenants' rent.
Also, on May 18, 1990, the Administrator mailed to Rita Capocciamo a notice
directing her to submit proof to the rent agency that she had occupied the
subject apartment. The notice stated that such proof could include utility
bills, and rent checks or receipts paid to the subject owner. The notice
also directed Rita Capocciamo to explain to the rent agency the reason why
South Shore Realty is collecting the rent from the sub-tenants, and it also
directed her to submit to the rent agency proof of having moved her furniture
to storage and to submit monthly storage bills.
In the subject owner's response, dated May 23, 1990, it stated that: "All
rent bills are mailed to Rita Capocciamo at 90 Waterford Road, Island Park,
New York...pursuant to the prime tenant's request." The subject owner
further alleged that it does not bill the sub-tenants'; that there is no
relationship between the subject owner and South Shore Realty, and that there
is no sublease agreement between Rita Capocciamo and the subject owner.
To its response the subject owner attached a copy of Rita Capocciamo's
initial lease which commenced on December 1, 1988 and expired on November 30,
1989 at a monthly rent of $722.77, and a copy of Rita Capocciamo's two-year
renewal lease commencing on December 1, 1989 and expiring on November 30,
1991 at a monthly rent of $769.75.
On May 25, 1990, Rita Capocciamo submitted her response to the Administrator
which alleged, among other things, that she does not have any utility bills,
and that South Shore collects the sub-tenants' rent because she is often out
of town due to her job.
To her response, Rita Capocciamo attached, among other things, a copy of a
rent check, dated December 14, 1988, in the amount of $722.77 paid to the
subject owner by Rita Capocciamo, and a copy of a bill from a moving company,
dated January 3, 1989, which indicated that on the above-mentioned date Rita
Capocciamo had some of her possessions moved from the subject apartment to
another location.
In the order under review herein, the Administrator determined that there was
no evidence submitted which showed that Rita Capocciamo had occupied the
subject apartment, or that she had used the subject apartment as her primary
residence; that Rita Capocciamo was an illusory prime tenant; that the sub-
tenants were to be considered the prime tenants of the subject apartment;
that the subject owner was directed to offer a lease to the sub-tenants; that
the lease was to be effective February 1, 1990 and expire on January 31,
1992; that the legal regulated rent for the above-mentioned lease period was
to be $769.75 per month; that the sub-tenants commenced occupancy in the
subject apartment on December 15, 1988, and that the subject apartment's
legal regulated rent on the above-mentioned date was $722.77 per month.
DOCKET NO.: EF710339RO
Furthermore, the Administrator's order found that there was a rent overcharge
of $5,651.79 from December 15, 1988 through May 31, 1990, including treble
damages, and the broker's commission and management fee minus $852.51 which
is the amount Rita Capocciamo refunded to the sub-tenants. The Administrator
further found that the subject owner, Rita Capocciamo and the Greater South
Shore Sales & Resales Corporation were jointly and severally liable for the
above-mentioned amount due to the sub-tenants.
In her petition, Rita Capocciamo asserts, among other things, that she did
not willfully overcharge the sub-tenants; that the excess rents that were
collected were refunded; that treble damages should not have been imposed;
that the sublease did not start until January 15, 1989 and not December 15,
1988; that the petitioner did not collect excess rent after May 1, 1990; that
the Administrator's order under review herein overstated the amount of the
overcharge by two months; that the petitioner should not be liable for the
$1,162.00 in commission and management fees collected by the broker as, the
petitioner asserts, she did not receive the above-mentioned amount; that as
the petitioner's initial lease commenced on December 1, 1988, and that she
submitted to the Administrator a cancelled rent check for December, 1988, and
a moving bill, dated January 3, 1989, the petitioner alleges that she has
substantiated her occupancy in the subject apartment prior to the commence
ment of the initial sublease, and that the petitioner states that: "there is
no lawful authority for the District Rent Administrator to order the
cancellation of the existing sublease between Petitioner and the Claimants
and awarding a new lease directly with the owner of the premises."
After careful consideration, the Commissioner is of the opinion that this
petition should be granted in part.
The Commissioner notes that pursuant to a request, by the subject owner, to
reconsider the Administrator's order under review herein, the Administrator
issued an amended order issued on August 23, 1990 under Docket No. EE
710021RK, finding that the owner, Paulsen Real Estate Corporation, did not
collect overcharges from the sub-tenants and that the owner was therefore not
required to refund money to the complainant.
As to the petitioner's assertion that the overcharge was not willful, and
that treble damages, should not have been imposed, the Commissioner finds
that that assertion is without merit.
The record reflects that the petitioner's initial lease, with the subject
owner, commenced on December 1, 1988 and expired on November 30, 1989 at a
monthly rent of $722.77. The record further reflects that the above-
mentioned rental amount charged by the subject owner was, in fact, the legal
regulated rent for the subject apartment during the above-mentioned lease
period.
Based on the record in this proceeding, the Commissioner finds that from
December 15, 1988 through January 31, 1990 the petitioner collected rent,
from the sub-tenants, in the amount of $775.00 per month. Based on the
Administrator's order under review, the Commissioner finds that the subject
apartment's legal regulated rent for the above-mentioned period was $722.77
per month, and that the petitioner had overcharge the sub-tenants by $52.23
per month during the above-mentioned period.
DOCKET NO.: EF710339RO
The record further reflects that the petitioner's renewal lease, with the
subject owner, commenced on December 1, 1989 and expired on November 30, 1991
at a monthly rent of $769.75 per month. The record further reflects that the
above-mentioned rental amount charged by the subject owner was, in fact, the
legal regulated rent for the subject apartment during the above-mentioned
lease period.
Based on record in this proceeding, the Commissioner finds that the sub-
tenants signed a renewal lease, with the petitioner, commencing on February
1, 1990 and expiring on January 31, 1992 at a monthly rent of $845.00 per
month. Based on the Administrator's order under review herein, the
Commissioner finds that the subject apartment's legal regulated rent for the
above-mentioned period was $769.75 per month, and that the Administrator's
order had determined that the prime tenant had overcharged the sub-tenants by
$75.25 per month for four months.
As the monthly rent the petitioner charged the sub-tenants was greater than
the monthly rent paid by the petitioner to the owner, the Commissioner finds
that this fact evidences an intent by the petitioner to willfully collect
rent from the sub-tenants in excess of the legal regulated rent.
The Commissioner further finds that the refunding to the sub-tenants of the
$852.51 by the petitioner does not negate the Commissioner's finding that the
overcharge was willful as the petitioner did not refund all of the excess
rent collected from the sub-tenants.
Accordingly, the Commissioner finds that the portion of the Administrator's
order which imposed treble damages should not be disturbed.
The Commissioner notes that the sub-tenants submitted a receipt to the
Administrator showing that for the period December 15, 1988 through December
31, 1988 they paid $387.50 in rent. Accordingly, the Commissioner finds that
it was proper for the Administrator to calculate overcharges commencing from
December 15, 1988.
The Commissioner notes that the petitioner mailed a letter to the sub-
tenants, dated April 19, 1990, informing them that their rent effective on
May 1, 1990 will be $769.75 per month, which was the legal regulated rent at
that time. As the record reflects that the petitioner did not collect excess
rent from the sub-tenants after April 30, 1990, the Commissioner finds that
the Administrator should not have calculated overcharges past April 30, 1990.
As the Administrator's order under review herein determined that the
petitioner had collected $75.25 per month in excess of the legal regulated
rent for four months during the sub-tenants' renewal lease period, which
commenced on February 1, 1990; that the record reflects that the petitioner
only collected excess rent during the above-mentioned renewal lease period
for three months, the Commissioner finds that the Administrator's order
should be modified to reflect the fact that the overcharge amount should be
reduced by $75.25 and that the total amount to be refunded to the sub-tenants
should be reduced by $225.75 ($75.23 X 3). The Commissioner further finds
that the Administrator's order under review herein should be modified to
reflect the fact that the total amount that is to be refunded to the sub-
tenants is $5,426.04 ($5,651.79 - $225.75).
Accordingly, the Commissioner finds that the petition should be granted in
part.
DOCKET NO.: EF710339RO
As to the petitioner's allegation that she should not be liable for the
$1,162.00 in Commission and management fees paid to the broker by the sub-
tenants, the Commissioner finds that that allegation is without merit.
The Commissioner finds, based on the record in this proceeding, that the
broker, Greater South Shore Sales & Resales Corporation, collected the rent
from the sub-tenants on behalf of the petitioner. Accordingly, the
Commissioner finds that the Greater South Shore Sales & Resales Corporation
is an agent of the petitioner.
Pursuant to Section 2505.1 of the State Tenant Protection Regulations the
term rent "shall also include the payment by a tenant of a fee or rental
commission to a landlord or to any person or real estate broker where such
person or real estate broker is an agent or employee of the landlord...."
Based on the above-mentioned regulation, the Commissioner finds that the
payment by the sub-tenants to the aforementioned real estate broker of the
commission and management fees, in the amount of $1,162.00, constituted the
payment of rent.
As the real estate broker, Greater South Shore Sales & Resales Corporation is
an agent of the petitioner; that the payment of the commission and the
management fees by the sub-tenants constituted rent, the Commissioner finds
that the Administrator's determination that the $1,162.00 in commission and
management fees should be included in the total overcharge amount should not
be disturbed.
The Commissioner notes that the Administrator mailed to the petitioner a
notice, dated May 18, 1990, which stated that:
Please submit evidence to substantiate your occupancy of
the subject apartment sending to this office copies of
your utility bills (electric, gas, telephone) and copies
of...rent checks or receipts that you paid to Paulsen
Real Estate.
The record reflects that the petitioner did not submit to the rent agency
copies of any utility bills. The record further reflects that in response to
the above-mentioned notice the petitioner submitted a copy of her cancelled
rent check, dated December 14, 1988, which was made out to the subject owner,
Paulsen Realty Corporation, in the amount of $722.77. The petitioner also
submitted to the rent agency a copy of her aforementioned moving bill, dated
January 3, 1989.
Based on the preponderance of the evidence in this proceeding, the
Commissioner finds that the petitioner has not met her burden of proof in
showing that she has used the subject apartment as her primary residence.
As the Administrator determined that the sub-tenants commenced occupancy in
the subject apartment on December 15, 1988, the Commissioner finds that the
aforementioned moving bill, submitted by the petitioner, does not show that
the petitioner ever resided in the subject apartment, but it only shows that
the petitioner had some of her possessions, which were not specifically
listed in the moving bill, removed from the subject apartment on January 3,
DOCKET NO.: EF710339RO
1989.
As to the copy of the aforementioned rent check submitted by the petitioner,
the Commissioner finds that it does not show that the petitioner resided in
the subject apartment, but that it merely shows that the petitioner had paid
rent to subject owner.
Accordingly, the Commissioner finds that the Administrator's determination
that the petitioner did not submit evidence showing that she had used the
subject apartment as her primary residence should not be disturbed.
As to the petitioner's assertion that the Administrator had "no lawful
authority" to cancel the sublease between the petitioner and the sub-tenants,
and that the Administrator had no right to direct the subject owner to offer
a prime lease to the sub-tenants, the Commissioner finds that that assertion
is without merit.
As the record reflects that the petitioner has not been using the subject
apartment as her primary residence, and that the petitioner had collected
rent from the sub-tenants in excess of the legal regulated rent, the
Commissioner finds that the Administrator's determination that the petitioner
is an illusory prime tenant should not be disturbed.
The Commissioner points out that when it has been determined that the prime
tenant is an illusory prime tenant, as in this proceeding, directing the
owner to offer a prime lease to the sub-tenants, is a long established policy
followed by the rent agency and the predecessor agency of the Division of
Housing and Community Renewal in administrating the various status providing
for the regulation of housing.
The Commissioner notes that the Courts have affirmed the above-mentioned rent
agency policy.
Accordingly, the Commissioner finds that the complainants, in this proceed
ing, are to be given all of the rights afforded to prime tenants pursuant to
the applicable rent regulations.
THEREFORE, in accordance with the Emergency Tenant Protection Act of 1974 and
the State Tenant Protection Regulations, it is
ORDERED, that this petition be, and the same hereby is, granted in part, and
that the Administrator's order be, and the same hereby is, modified in
accordance with order and opinion, and it is
FURTHER ORDERED, that Rita Capocciamo and Greater South Shore Sales & Resales
Corporation shall immediately refund to the complainants all amounts not yet
refunded representing overcharges and penalties, and it is
FURTHER ORDERED, that if Rita Capocciamo and Greater South Shore Sales &
Resales Corporation have not refunded any such amounts upon the expiration of
the period for seeking judicial review of this order pursuant to Article 78
of the Civil Practice Law and Rules, then the complainants, Patricia Stefano
and Laura Flannery, may file and enforce a certified copy of this order as a
judgment for the amount of $5,426.04 against Rita Capocciamo, and Greater
South Shore Sales & Resales Corporation, jointly and severally, and it is
DOCKET NO.: EF710339RO
FURTHER ORDERED, that if Rita Capocciamo and/or Greater South Shore Sales &
Resales Corporation have already complied with the Administrator's order and
there are arrears due to the above-mentioned parties as a result of the
instant determination, the complainants shall be permitted to pay off the
arrears in three equal monthly installments beginning with the first rent
payment date after issuance of this order and opinion. Should the complain
ants vacate after the issuance of this order or have already vacated, said
arrears shall be payable immediately.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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