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 NO.: 6020
     IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
     APPEAL OF                              DOCKET NO.: EB 410347-RO
                                         :  
                                            DRO DOCKET NO.: 49302
       MELOHN PROPERTIES,
                           PETITIONER    :  TENANT: MICHELE TEICHNER
     ------------------------------------X                             

          ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW 
             IN PART AND MODIFYING DISTRICT RENT ADMINISTRATOR'S ORDER

     On February 28, 1990, the above-named petitioner-owner  filed  a  Petition
     for Administrative Review of an order issued on January 24,  1990  by  the
     District Rent Administrator, 92-31 Union Hall Street, Jamaica,  New  York,
     concerning housing accommodations known as Apartment 5C at 200  West  15th
     Street, New York,  New  York,  wherein  the  District  Rent  Administrator
     determined the fair market rent pursuant to the special fair  market  rent
     guideline promulgated by the New York City Rent Guidelines Board  for  use
     in calculating fair market rent appeals.

     Subsequent thereto, the tenant filed  a  petition  in  the  Supreme  Court
     pursuant to Article 78 of the Civil Practice Law and Rules, in the  nature
     of  mandamus,  for  a  judgment  directing  the  Division  to   render   a
     determination of the owner's administrative appeal.  By stipulation of the 
     parties, the Article 78 proceeding was settled on condition that the  DHCR
     render  an  expeditious  determination  of  the   owner's   petition   for
     administrative review.

     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.

     This proceeding was originally commenced by the filing by the tenant of an 
     objection to the apartment registration,  including  a  fair  market  rent
     appeal.  The tenant took occupancy pursuant to a lease commencing  October
     1, 1982 and expiring September 30, 1983 at a monthly rent of $625.00.

     By notice dated October 26, 1987, the owner was served with a copy of  the
     tenant's objection and was advised that it was required to  submit  copies
     of leases or rent ledgers from June 30, 1974, or the date of decontrol, if 
     later.

     By answer dated December 7, 1987 the owner advised that it  purchased  the
     subject building on September 15, 1982.  The owner also stated that it had 
     entered into an  Assurance  of  Discontinuance  with  the  office  of  the
     Attorney General which resulted in an adjustment of the tenant's  rent  as
     calculated from April 1, 1980.  The owner submitted leases for the subject








          DOCKET NUMBER: EB 410347-RO
     apartment from April 1, 1980; a copy of the  Assurance  of  Discontinuance
     indicating adjustment  of  the  tenant's  initial  rent  from  $625.00  to
     $612.75, adjustment of the rent for the tenant's renewal lease  commencing
     November 1, 1983 from $662.50 to $649.52, and a refund to  the  tenant  of
     overcharges in the amount of $392.89 through April 30, 1985;and a copy  of
     a letter to the tenant dated April 22, 1985 indicating adjustment  of  the
     tenant's rent to $649.52 and advising the tenant that a rent credit  would
     appear on the May 1985 bill.  The owner requested that if DHCR decided  to
     process the tenant's case and supersede the Assurance  of  Discontinuance,
     the owner be so notified and given an opportunity to  submit  any  further
     information that might be necessary.

     By notice dated April 10, 1989, the owner was advised that the  fact  that
     the Attorney General's  office  had  investigated  the  building  did  not
     relieve the DHCR from processing an individual  tenant's  complaint.   The
     owner was requested to send an account of  any  refund  given  the  tenant
     together with leases requested.

     By answer, dated April 12,  1989,  the  owner  submitted  copies  of  rent
     control Maximum Base Rent information for the subject building and  stated
     that it was trying to locate copies of leases signed by the  previous  two
     owners.  The owner also stated that the information regarding  the  refund
     to the tenant was previously submitted with its December 1987 submission.

     On November 27, 1989, a Summary Notice was sent to the parties  indicating
     the calculation of the fair market  rent  pursuant  to  the  special  fair
     market rent guideline.

     In the order under appeal herein, the District Rent Administrator adjusted 
     the initial legal regulated rent by establishing a  fair  market  rent  of
     $274.85 effective October 1, 1982, the commencement date of  the  tenant's
     initial lease, and directed the owner to refund to the tenant excess  rent
     in the amount of $31,447.36 for the period from October  1,  1982  through
     September 30, 1989.

     In this petition, the owner  contends  that  it  took  possession  of  the
     subject building on September 15, 1982; that  rent  control  documents  on
     file with the DHCR establish that the complainant tenant was not the first 
     rent stabilized tenant to occupy the subject apartment; that the owner was 
     prejudiced by the Administrator's failure to search  DHCR's  own  records;
     that a search for and consideration of such records  would  have  put  the
     Administrator on notice that the  tenant  was  not  the  first  stabilized
     tenant; that recent lease information obtained by the owner, together with 
     DHCR's rent control information, indicates that the first rent  stabilized
     tenant took occupancy on June 1, 1975 at a free market rent of $235.00 per 
     month; that the Administrator was duly notified of the owner's good  faith
     efforts to obtain a complete rent history for the subject apartment from 2 
     prior owners; that the owner should not be penalized for  its  good  faith
     reliance on the Assurance  of  Discontinuance;  and  that  the  owner  was
     unaware that it was required to submit additional lease information in the 
     absence of a DHCR request for same and the owner  was  unaware  that  such
     data could be used in a fair market rent appeal  application.   The  owner
     further states that subsequent to  the  issuance  of  the  Administrator's
     order it has undertaken a careful search of its records  and  now  submits
     with its 







          DOCKET NUMBER: EB 410347-RO
     petition for administrative review leases for the  period  from  June  15,
     1975 to December 31, 1979. The  June  15,  1975  lease  contains  a  rider
     stating that the apartment was vacancy  decontrolled.   The  owner  states
     that, utilizing these  leases,  the  June  1975  initial  stabilized  rent
     exceeded the fair market rent and  the  lawful  stabilized  rent  for  the
     complainant tenant's initial  lease  term  is  $475.08.   The  owner  also
     asserts that the Administrator  failed  to  take  into  account  the  rent
     reduction and refund made pursuant to the Assurance of Discontinuance  and
     that the owner was never afforded an opportunity to  submit  comparability
     data pursuant to the requirements of the current Rent Stabilization  Code.
     The owner also advised that the tenant vacated the  subject  apartment  on
     July 31, 1989.

     In response to the petition, the current tenant of the  subject  apartment
     stated, in substance, that a thorough review of all  documents  should  be
     made in this case.

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

     Section 2529.6 of the Rent Stabilization Code provides that administrative 
     review shall be limited to facts or evidence before a  Rent  Administrator
     as raised in the petition.

     The record in this case, including DHCR records and rent records submitted 
     by the owner with its petition, indicates that the owner failed to  submit
     complete rent records from the base date for the subject apartment  during
     the proceeding before the Administrator although afforded  an  opportunity
     to do so.  The owner contends in its petition  that  it  made  good  faith
     efforts to obtain a complete rental history for the subject apartment from 
     2 prior owners  and  that  it  relied  in  good  faith  on  the  Assurance
     Discontinuance.  Regarding the owner's first contention, it is noted  that
     the owner submitted no documentation of  its  alleged  efforts  to  obtain
     rent records from prior owners and that the owner  offers  no  explanation
     for  its  ability  to  submit  rent  records  for  the   first   time   on
     administrative appeal other than to state that it undertook careful search 
     its records subsequent to the issuance of the Administrator's order.  This 
     does not excuse the owner's failure to make such a search and submit  such
     records in a timely fashion prior to the issuance of  the  Administrator's
     order.  Regarding the owner's second contention, the owner's  reliance  on
     the Assurance of Discontinuance was not justified inasmuch  as  the  owner
     was  specifically  advised  by  notice  dated  April  10,  1989  that  the
     Assurance of Discontinuance would  not  bar  processing  of  the  tenant's
     complaint and that rent records  for  the  subject  apartment  were  still
     required.  The owner responded to this  notice  by  stating  that  it  was
     attempting to locate rent records for earlier leases, but the owner failed 
     to submit such records.  The Commissioner therefore finds  that  the  rent
     records submitted by the  owner  for  the  first  time  on  administrative
     appeal will not be accepted.

     Regarding  the  owner's  assertion  that  it   was   prejudiced   by   the
     Administrator's failure to search its own records, DHCR records which were 
     available to the Administrator consisted of a  Master  Building  1974  and
     1975 Maximum Base Rent and Maximum Collectible Rent Schedule filed by  the
     owner with the Office of Rent Control dated May 15, 1975 which listed  the







          DOCKET NUMBER: EB 410347-RO
     subject apartment as rent controlled and a subsequent  corrected  copy  of
     this schedule filed by the owner dated October 30, 1975 which did not list 
     the subject apartment as  rent  controlled.   Based  on  this  information
     alone, without further documentation, it would have  been  appropriate  to
     apply the default procedure, including  freezing  the  rent  and  imposing
     treble damages.  Therefore the Commissioner finds that the owner  was  not
     prejudiced by the Administrator's failure to search DHCR records.

     Similarly, the Commissioner finds that, while the  record  indicates  that
     the owner was not afforded an opportunity  to  submit  comparability  data
     under the current Code, any further processing of the proceeding  at  this
     time would result not in additional  processing  as  a  fair  market  rent
     appeal but in the application of the  default  procedure.   Therefore  the
     Commissioner finds that there has been no prejudice to the owner and there 
     is no basis for  disturbing  the  Administrator's  order  on  the  owner's
     appeal.

     The Commissioner finds that the owner is correct in its assertion that the 
     Administrator failed to take into account  a  rent  reduction  and  refund
     given to the tenant pursuant to  the  Assurance  of  Discontinuance.   The
     record indicates that the tenant's leases commencing with the November  1,
     1985 lease reflect the rent reduction.  The Administrator  also  misstated
     the tenant's lease terms.  The corrected lease terms with  adjusted  rents
     and corrected total amount of excess rent are indicated as follows:


     Lease Term        Rent Charged        Lawful Stabilized       Refund Due
                                           Rent

     9/30/82-10/31/83   $625.00             $274.85                 $4551.95 
     11/1/83-10/31/85   $662.50             $294.09                 $6631.38
                      --------------------------------------------------------- 

                        $649.52             $294.09                  $2132.58
                        (commencing     
                         5/1/85)

     11/1/85-10/31/87   $691.74             $328.21                  $8724.72
     11/1/87-10/31/89   $736.70             $349.54                  $8130.36  
     (tenant vacated                                                 $30,170.99
      7/31/89)                                 Refund to tenant -    $   392.89 
                                               Total Refund Due      $29,778.10 

                                                                           
     Because this determination concerns lawful rents  only  through  July  31,
     1989, the owner is cautioned to adjust subsequent rents to  an  amount  no
     greater than that determined by this order plus any lawful increases,  and
     to register any adjusted rents with this order and opinion being given  as
     the explanation for the adjustment.  A copy of this order and  opinion  is
     being sent to the current occupant of the subject apartment.









          DOCKET NUMBER: EB 410347-RO
     THEREFORE, in accordance with the Rent Stabilization Law and Code, it is 

     ORDERED, that this petition be and the same hereby is granted in part  and
     the District Rent Administrator's order be and the same hereby is modified 
     to the extent hereinabove indicated.

     ISSUED:











                                                                   
                                     JOSEPH A. D'AGOSTA
                                     Deputy Commissioner




                                                   
    

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