DOC. NO.: EA 410107-RO
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          APPEAL OF                               DOCKET NO.: EA 410107-RO
                                                  DRO DOCKET NO.: 
               M.J. RAYNES, INCORPORATED (AS                L 3115026-T
               SQUARE ASSOCIATES)             :
                                  PETITIONER  :    

                                       IN PART

          On January 15, 1990 the above named petitioner-owner filed a 
          Petition for Administrative Review against an order issued on 
          December 11, 1989, by the Rent Administrator at Gertz Plaza, 
          Jamaica, New York, concerning housing accommodations known as 
          apartment 24C at Two Lincoln Square, New York, New York, wherein 
          the Administrator established the stabilized rent and directed 
          the owner to refund $31,616.90 including treble damages from 
          April 1, 1984.

          The Commissioner notes that this proceeding was initiated prior 
          to April 1, 1984.  Sections 2526.1(a) (4) and 2521.1(d) of the 
          Rent Stabilization Code (effective May 1, 1987) governing rent 
          overcharge and fair market rent proceedings provide that 
          determination of these matters be based upon the law or code 
          provisions in effect on March 31, 1984.  Therefore, unless 
          otherwise indicated, reference to sections of the Rent 
          Stabilization Code (Code) contained herein are to the Code in 
          effect on April 30, 1987.

          The Commissioner has reviewed all the evidence in the record and 
          has carefully considered that portion of the record relevant to 
          the issues raised in the administrative appeal.

          This proceeding was originally commenced on March 31, 1984, by 
          the filing of a Fair Market Rent Appeal (that was processed as a 
          complaint of rent overcharge) with the New York City Conciliation 
          and Appeals Board (CAB, the agency formerly charged with 
          enforcing the Rent Stabilization Law) by the tenant.

          On the chart attached to and made a part of the appealed order 
          the Administrator established the stabilized rent.

          DOC. NO.: EA 410107-RO
          In its Petition the owner contends that the Administrator's order 
          and /or the chart annexed thereto contain the following errors:

          1.      The chart does not reflect the renewal lease entered 
into with the prior tenant (Edelson) for a term running 
from October 1, 1981 through September 30, 1984 at a 
monthly rent of $593.25.  If the Administrator had, 
correctly, used the rent under that lease as the base 
rent for calculating the tenant's vacancy lease and had 
the Administrator, correctly credited the owner with a 
20.C(1) increase for the new refrigerator and 
dishwasher installed in the apartment (at a combined 
cost of $810.79), the Administrator would have 
calculated the tenant's vacancy lease rent at $782.64 
and not $639.28.

          2.      The owner had originally calculated the tenant's 
vacancy lease rent at $800.77 because the renting 
agent had improperly added in 42C increases before they 
were due.  The actual amount by which the tenant was 
overcharged for the time she took occupancy through the 
end of the last lease considered by the Administrator 
(April 1, 1988 through March 31, 1990) was only 

          3.      The Administrator did not factor the tenant's April 1, 
1986 through March 31, 1988 renewal lease at a rent of 
$976.73 into the calculation of the tenant's stabilized 

          4.      The correct calculation of the overcharges collected 
shows, by virtue of the small amount of such 
overcharges and the fact that they were obviously the 
result of mathematical errors, that the collection of 
these overcharges was not willful.  Therefore, treble 
damages should not have been imposed on the owner.

          In the tenant's answer opposing the Petition, the tenant's 
          attorney asserts the following:

          1.      The notice the tenant received with her copy of the 
order below did not put her on notice that she too 
could file a PAR if she found errors in said order.  
Therefore, this answer should be treated as the 
tenant's PAR.

          2.      The appealed order and/or chart contains the following 

          DOC. NO.: EA 410107-RO

          a.As noted by the owner, the Administrator's 
calculation of the stabilized rent and the 
overcharges collected left out the tenant's 
April 1, 1986 through March 31, 1988 lease.

          b.Only twenty-nine of the thirty-six months 
encompassed by the tenant's April 1, 1983 
through March 31, 1986 lease are accounted 
for in the chart.

          3.      The Administrator properly rejected the rent under the 
Edelson October 1, 1981 to september 30, 1984 lease as 
the base rent for computing the tenant's vacancy lease 
under Guidelines 13.  Guidelines 13 increases are to be 
computed based on the rent charged and paid on 
September 30, 1981; not October 1, 1981.

          4.      The 20C(1) increase to which the owner might have been 
entitled was $20.27, not $41.08 as claimed in the 
owner's PAR.  The invoice attached to the owner's PAR 
shows a total cost of $810.79 for the alleged new 
equipment.  One fortieth of $810.79 is $20.27, not 

          5.      The Administrator should have calculated the 42C 
increases due under the tenant's lease as due on the 
anniversary of the tenant's lease and not the 
anniversary of the prior tenant's lease.

          6.      The owner's calculation of the overcharges, based as it 
is on the Edelson October 1, 1981 to September 30, 1984 
is erroneous.  The proper calculation is not set forth 
on the chart attached to the tenant's answer.

          7.      To the extent that the Administrator did not factor the 
new equipment provided to the tenant into his rent 
calculations because no supporting documentation was 
submitted below, the Administrator's action should be 
affirmed as substantiating materials submitted for the 
first time on appeal are beyond the scope of review on 

          8.      The Administrator properly imposed treble damages on 
overcharges collected on or after April 1, 1984.  The 
tenant should be paid interest on overcharges collected 
before April 1, 1984 and the tenant should be awarded 
attorney's fees.

          DOC. NO.: EA 410107-RO

          The Commissioner is of the opinion that the Petition should be 
          granted in part.

          The Commissioner finds , as both the owner and the tenant point 
          out, that the Administrator incorrectly failed to include the 
          tenant's 1986/1988 renewal lease in his rent calculation chart.  
          The Commissioner also finds that the Administrator's chart 
          annexed to the order below contained a number of other 

          The aforementioned errors have been corrected on the chart 
          annexed hereto and made a part hereof.  The stabilized rent and 
          the overcharge to be refunded are as indicated thereon.

          As to the salient arguments set forth in the Petition and the 
          tenant's answer, the Commissioner finds as follows:

          1.      Both the tenant's vacancy lease and the prior tenant's 
last (October 1, 1981 to September 30, 1984) renewal 
lease were subject to Guidelines 13 (applicable to 
leases which commenced between October 1, 1981 and 
September 30, 1982) therefore, pursuant to Corporation 
Counsel's Advisory Opinion 107261, the stabilized rent 
for both these leases must be established by increasing 
the prior tenant's September 30, 1981 rental of $478.26 
(see the annexed chart) by the allowable guidelines 
(and, for the tenant, vacancy allowance) increase.  
That is the formula by which the rents under each of 
these two leases should have been calculated and the 
formula used in the chart annexed hereto and made a 
part hereof.

          2.      The Commissioner has ruled that when the entire 
overcharge is the result of an owner's failure to apply 
the rule prohibiting compounding of guidelines 
increases within the same guidelines period, a 
technical rule of rent computation not cited in the 
Code or annual guidelines orders, such overcharge is 
not willful, treble damages are not warranted and the 
penalty should be limited to the amount of the 
overcharge plus interest.  The Commissioner believes 

that in a case such as this where approximately two
thirds (2/3rd) of the overcharges collected were the 
result of an owner's failure to apply the rule 
prohibiting compounding of guidelines increases, the 
portion of the overcharges generated by such 
compounding should not be subject to treble damages.  
This modification of the appealed order and the 
calculation of the total refund are shown on the 
annexed chart.

          DOC. NO.: EA 410107-RO
          3.      The Commissioner finds that the tenant has admitted the 
installation of a new dishwasher and refrigerator at 
the subject accommodation and the owner has adequately 
substantiated the combined cost of said items at 
$810.79.  The Commissioner finds that the 
substantiating documents are within the scope of review 
on appeal since the original complaint herein was as to 
a FMRA and said documents were not requested by the 
Administrator below.  Therefore, the owner is credited 
with a Section 20C(1) increase equal to one fortieth 
(1/40th) of said cost, to wit, $20.27, in the 
calculation of the tenant's vacancy lease rent.

          4.      The Petition does not reflect a correct calculation of 
the overcharges collected.  The owner has not sustained 
its burden of proof on the issue of willfulness as to 
those overcharges not attributable to the compounding 
of guidelines increases, therefore, as to said 
overcharges, treble damages should, and have (on the 
annexed chart) been imposed.

          5.      The tenant's assertion that she was not put on notice 
of the fact that she too could file a PAR if she 
objected to the order below is without merit.  The 
standard notice of the availability of the 
Administrative Review process does not indicate that 
that process is available to one party and not the 
other.  Moreover, the tenant's answer was not filed 
until March 24, 1990.  The appealed order, however, was 
issued on December 11, 1989 and there is no provision 
under the applicable regulations permitting an 
extension of time for the filing of a PAR.

          6.      Therefore, the tenant's answer may not be deemed to be 
a PAR which is to say that issues not raised in the 
Petition, or otherwise cognizable on appeal, may not be 
raised in the answer.  Nevertheless, the Commissioner 
notes that crediting of the 42C increases on the 
anniversary of the lease under which the initial 
occupancy of the apartment occurred, which was the 
procedure followed by the Administrator, is the correct 
way to calculate the highest collectible stabilized 
rent and has been followed in the annexed chart.

          7.      Not having been raised below and raised solely in the 

          DOC. NO.: EA 410107-RO
          answer to the Petition, the tenant's application for 
legal fees may not be entertained in this order and 

          8.      The Commissioner finds that the tenant's assertion that 
interest should be awarded on overcharges collected 
before April 1, 1984 has no foundation in the 
applicable Law or Regulations.

          9.      Based on the aforegoing, and as indicated in the 
annexed chart, the Commissioner finds the refund to be 
paid the tenant, Hilde Monkmeyer, to be as follows:

          Total Pre 4/1/84 Overcharges: $3,611.34
          Total Overcharges which were
          not attributable to compounding
          ($3,223.67) x 3                    $9,671.01

          Total Overcharges which were
          attributable to compounding
          and interest:$9,291.92

          Total Overcharges:    $22,574.27

          Excess Security:   187.20

          Total Refund
          Due Tenants as of
          December 31,1989..................$22,761.47

          Upon the expiration of the period in which the owner may 
          institute a proceeding pursuant to Article Seventy-eight of the 
          Civil Practice Law and Rules this order may be filed and enforced 
          by the tenant in the same manner as a judgment or not in excess 
          of twenty percent thereof per month may be offset against any 
          rent thereafter due the owner.

          If the owner has already complied with the Administrator's order 
          and there are arrears due to the owner as a result of the instant 
          determination, the tenant may pay off the arrears in six (6) 
          equal monthly installments.  Should the tenant vacate after the 
          issuance of this order, said arrears shall be payable 

          THEREFORE, pursuant to the Rent Stabilization Law and Code, it is

          ORDERED, that the Petition be, and the same hereby is granted in 
          part; and that the Administrator's order be, and the same hereby 
          is amended in accordance with this order and opinion.


          DOC. NO.: EA 410107-RO
          Deputy Commissioner


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