EC 410480 RO; DK 410040 RT; DK 410018 RO
                                STATE OF NEW YORK
                          OFFICE OF RENT ADMINISTRATION
                                   GERTZ PLAZA
                             92-31 UNION HALL STREET
                             JAMAICA, NEW YORK 11433

      APPEAL OF                              DOCKET NO. EC 410480 RO;
                                                        DK 410040 RT;
                                                        DK 410018 RO

                                          :  DISTRICT RENT OFFICE
      Vintage Realty/173 Ave A Associates,   DOCKET NO. ZL 3117274 RT
                     and                                as amended
      Darryl Turner,
                                             TENANT: Darryl Turner            

                              PETITIONERS : 


      On November 17, 1989 and March 29, 1990, the above-named petitioner- 
      owner filed Petitions for Administrative Review against an order issued 
      on October 13, 1989 and amended on February 22, 1990, by the Rent 
      Administrator, 92-31 Union Hall Street, Jamaica, New York, concerning 
      the housing accommodations known as 188 Norfolk Street, New York,       
      New York, Apartment No. 1I, wherein the Rent Administrator determined 
      that the owner had overcharged the tenant.

      These petitions are being consolidated for disposition herein.

      On November 10, 1989, the above named petitioner-tenant filed a petition 
      for Administrative Review against the aforementioned order issued on 
      October 13, 1989.  In addition, the tenant requested reconsideration of 
      the Rent Administrator's order which was granted and the amended order 
      issued on February 22, 1990.  Therefore, the tenant's petition is being 
      terminated as moot.

      The Commissioner notes that this proceeding was filed prior to April 1, 
      1984.  Sections 2526.1(a)(4) and 2521.(d) of the Rent Stabilization Code 
      (effective May 1, 1987) governing rent overcharges 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.

          EC 410480 RO; DK 410040 RT; DK 410018 RO

      The Administrative Appeals are being determined pursuant to the 
      provisions of Section 42A of the former Rent Stabilization Code.

      The issue herein is whether the Rent Administrator's order was 

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

      This proceeding was originally commenced by the filing in March 1984 of  
      a Fair Market Rent Application, (hereafter FMRA) and rent overcharge 
      complaint by the tenant who stated in substance that his vacancy rent of 
      $559.08 commencing November 1, 1983 was in excess of the fair market 

      In answer to the complaint, the owner stated in substance that the base 
      date for the subject apartment was January 1, 1982 at a rental of 
      $475.00 and prior to January 1, 1982, the subject apartment had been 
      owner occupied by the prior owner (Stallings) since decontrol.  The 
      owner submitted leases from January 1, 1982 to October 31, 1985.

      Records on file with DHCR indicate that a Landlord's Report of Statutory 
      Decontrol had been filed on January 7, 1972.  The Rent Administrator 
      directed the owner to submit rent ledgers from 1973-1982 to substantiate 
      the prior owner's occupancy.  The owner failed to comply with the Rent 
      Administrator's directive.

      In Order Number ZL 3117274 RT, the Rent Administrator determined that, 
      due to the owner's failure to submit a complete rental history, the 
      tenant had been overcharged in the amount of $11,259.06 including treble 
      damages on that portion of the overcharge collected on and after April 
      1, 1984.  The tenant's FMRA was dismissed due to vacancy decontrol of 
      the subject apartment prior to January 1, 1974 and the lawful 
      stabilization rent was established by computation method #2 at $499.18, 
      effective November 1, 1983, utilizing the tenant's vacancy rent of 
      $559.08 roll backed by, applicable vacancy and guideline increases.

      In the owner's petition filed under docket DK 410018 RO, the owner 
      alleges in substance that the Rent Administrator failed to consider that 
      the owner had submitted a complete rent history from the subject 
      apartment's base date of January 1, 1982; that prior to January 1, 1982 
      the apartment was owner-occupied by the prior owner; that the current 
      owner should not be liable for any overcharges or misrepresentations 
      resulting from the prior owner's actions; that treble damages were not 
      warranted because the owner was never advised of the possibility of the 
      imposition of treble damages and moreover because the case was filed 
      originally with the Conciliation and Appeals Board (hereafter C.A.B.) 
      which never imposed interest or treble damages.

      The tenant in both his petition and Request for Reconsideration dated 
      October 24, 1989, alleged in substance that the Rent Administrator 

          EC 410480 RO; DK 410040 RT; DK 410018 RO

      failed to use the lowest rent in defaulting the owner; erroneously cited 
      the subject apartment's rent of $559.08 as the lowest rent; utilized 
      computation method #2 based on the erroneous information above; failed 
      to utilize the correct lowest rent of $154.00 for Apartment 1H, for the 
      same size apartment in the building, as shown in the 1984 registered 
      rents for the building.

      The Rent Administrator granted the tenant's request for reconsideration 
      and on February 22, 1990 amended the prior order by establishing the 
      lawful stabilization rent at $154.00, effective November 1, 1983 and 
      directed a refund to the tenant of $85,463.28 including treble damages 
      on that portion of the overcharge collected on and after April 1, 1984.

      Thereupon, the owner filed its petition (under Docket EC 410480 RO) 
      against the amended order reiterating it's earlier stated contentions 
      and additionally alleging in substance that the Rent Administrator's 
      amended order utilizing computation method #1 and the rent of $154.00 
      was in error and at variance with previous Rent Administrator's orders 
      which used an average rent of comparable apartments and the C.A.B. which 
      had used the lowest rent in the line; that the courts have affirmed the 
      use of the lowest rent in the line in Jufra Realty v DHCR, (Index No. 
      3362/89, Sup.ct. N.Y.Co., Moskowitz, J.) and the average rent of 
      comparable apartments in 3505 Broadway Realty Corp. v. DHCR, (N.Y.L.J., 
      P.25, col. 6 [2/15/90] [App. Div., 1st Dept.]); that the courts have 
      held in J.R.D. Mgmt. Corp. v. Eimicke A.D.2d 539, N.Y.S. 2d 667, that 
      DHCR may not review the rental history of a subject apartment prior to 
      April 1, 1980; and that the Rent Administrator's amending of the order 
      was in excess of the 35 day period in which to file a PAR and was 
      therefore an improper modification of the original default computation 
      method utilized in the earlier order.  The owner submitted with its 
      petition copies of 2 earlier Rent Administrator's orders (TC 70621 G & 
      74068 G) which used an average rent in the default procedure, samples of 
      treble damage notices used in other cases and an unsigned, unnotarized 
      affidavit by Paul Stallings, stating he was the son of the prior owner 
      and resided in the subject apartment from April 1, 1980 through December 
      1981 and that the building was transferred to the current owner in March 

      In answer to the owner's petitions the tenant stated in substance that
      the owner has never substantiated its contention that the apartment was 
      owner-occupied from 1972-1982 or if any rent was paid during that 
      period; that rent control records and long term tenants in the building 
      do not support the owner's contention that the apartment was occupied by 
      the prior owner (Stallings) from 1972-1982; that Lavanant v. DHCR, not 
      the JRD decision cited by the owner, is the applicable case because the 
      subject apartment is under the jurisdiction of the 1st Dept; that the 
      Rent Administrator's use of the lowest rent in the building is the 
      standard procedure used by DHCR and that treble damages are warranted.

      The Commissioner is of the opinion that the owner's petitions should be 
      denied and that the tenant's petition should be terminated as moot.

          EC 410480 RO; DK 410040 RT; DK 410018 RO

      Section 42A of the former Rent Stabilization Code requires that an owner 
      retain complete records for each stabilized apartment in effect from 
      June 30, 1974 to date and produce them to the DHCR upon demand.  If the 
      apartment was decontrolled from the Rent Control Law after June 30, 1974 
      the owner must provide satisfactory documentary evidence of the 
      apartment's date of decontrol, and produce a rental history from that 

      The owner's reliance on the JRD decision is misplaced as the tenant has 
      noted because that decision is determinative only for overcharge cases 
      filed prior to April 1, 1984 for dwelling units located in the Second 

      Since the issuance of the decision in JRD, the Appellate Division, First 
      Department, in the case of Lavanant v. DHCR, 148 A.D.2d 185, 544 
      N.Y.S.2d 331 (App. Div. 1st Dept. 1989), has issued a decision in direct 
      conflict with the holding in JRD.  The Lavanant court expressly rejected 
      the JRD ruling finding that the DHCR may properly require an owner to 
      submit complete rent records, rather than records for just four years, 
      and that such requirement is both rational and supported by the Law and 
      legislative history of the Omnibus Housing Act.

      Since in the instant case, the subject dwelling unit is located in the 
      First Department, the DHCR is not constrained to follow the JRD decision 
      in determining the tenant's overcharge complaint, limiting the 
      requirement for rent records to April 1, 1980. 

      The Commissioner rejects the owner's contention that the establishment 
      of the tenant's rent by the default procedure was unwarranted due to 
      owner's occupancy from 1972-1982.  Although given opportunities to and 
      specifically directed by the Rent Administrator to substantiate the 
      priors owner's continuous occupancy of the subject apartment since 
      decontrol, the owner has failed to submit substantive substantiation of 
      its contention either below or on appeal.  Further, a review of rent 
      control records on file with DHCR indicates multiple and discrete owners 
      of the subject premises from 1972 through 1982 and not a single prior 
      owner in occupancy for the entire period as alleged by the current 

      In 1982, the DHCR predecessor N.Y.C. Conciliation and Appeals Board 
      (C.A.B.) adopted procedures to be used to determine an apartment rent 
      where the owner did not provide a complete rent history of the 
      apartment.  In such cases the rent is calculated to be the lowest of the 
      following amounts:

           1)   The lowest rent for an apartment in the same line, 
                without any Guidelines adjustment for the 
                complainant's vacancy lease or for any subsequent 
                lease commencing prior to the date of the agency's 

           2)   the current tenant's initial rent minus any 

          EC 410480 RO; DK 410040 RT; DK 410018 RO

      allowance for the tenant's initial lease, without 
                any Guidelines adjustment for any subsequent lease 
                commencing prior to the date of the agency's order.

           3)   the prior tenant's last rent, without any Guidelines 
                adjustment for any subsequent lease commencing prior 
                to the date of the agency's order.

      These procedures have been upheld by the Courts (61 Jane Street 
      Associates v. CAB, NYLJ, May 8, 1984, p.11, col.4 (Sup. Ct. N.Y.Co., 
      Greenfield, J.), 108 A.D.2d 636, 486 NYS2d 694, affirmed 65 NY2d 898, 
      493 NYS2d 455 (C.A., 1985).

      When the C.A.B. adopted the default procedures in 1982 there was no 
      system of registration of apartment sizes and rents.  To avoid undue 
      processing in the form of efforts to ascertain all comparable apartments 
      in a building anytime an overcharge complaint was made, the C.A.B. used 
      the standard of considering apartments in the same line as the apartment 
      complained about as a way to achieve a rough comparability.  Since the 
      room count and rents of all stabilized apartments have been required to 
      be registered since April 1, 1984, the DHCR has since 1985 been using 
      the lowest rent of an apartment with the same room count in the 
      building.  Although this may mean that the apartment being used in the 
      test is not exactly identical to the apartment at issue (since the 
      latter may have additional features or be on a more desirable floor or 
      have a larger area although having the same number of rooms), the 
      Commissioner notes that the Section 42A  default procedure is a penalty 
      to be applied where an owner has defaulted on its obligation to 
      establish the lawfulness of the rents charged, rather than its being an 
      equitable situation where a more exact comparability might be necessary.

      The use of the standard of the lowest rent for a comparably-sized 
      apartment promotes the enforcement of the Rent Stabilization Law in 
      several important ways and is a natural evolution from the initial 
      implementation of the procedures in 1982.  First, it gives the DHCR a 
      larger survey of comparably-sized apartments.  This larger survey 
      reduces the likelihood that the rent selected is one in excess of the 
      Guidelines.  The use of just one line of apartments increases the 
      possibility that the apartment selected is one for which an owner has 
      charged an illegal rent, especially if the line contains few apartments.  
      Second, a line of apartments may not exist, such as in a garden 
      apartment complex, or may be difficult to ascertain.  The use of the 
      registration records avoids this problem and permits quicker resolution 
      of a tenant's complaint.  Third, the DHCR should not have to rely upon 
      an owner's designation of a line where such owner has been shown to have 
      violated one of the most basic requirements of the Rent Stabilization 
      Law, namely the maintenance of complete rent records.  Accord: BK 410153 
      RO; DJ 410377 RO.

      The Court in 3505 Broadway Corp. v. DHCR, supra a case cited by the 
      petitioner-owner, neither discussed nor ruled on the merits of the use 
      of average rents in Default Computation Method #1 but solely remanded 

          EC 410480 RO; DK 410040 RT; DK 410018 RO

      that order for the correction of a numerical error in the average rent 
      cited by the Rent Administrator in that case.  It was not an affirmation 
      of the method utilized by the Rent Administrator in the case nor a 
      refutation of the standard DHCR procedure discussed above.

      As the Rent Administrator's amended order utilized the lowest rent of 
      the same size apartment in the subject building in the establishment of 
      the lawful stabilization rent by Default Computation method #1; it was 
      in accordance with DHCR's standard Default Policy and Procedure.

      With regard to the owner's contention that the imposition of treble 
      damages was not warranted, Section 2526.1 of the Rent Stabilization Code 
      provides in pertinent part that any owner who is found by the DHCR to 
      have collected a rent or other consideration in excess of the legal 
      regulated rent on and after April 1, 1984 shall be ordered to pay to the 
      tenant a penalty equal to three times the amount of such excess.  If the 
      owner establishes by a preponderance of the evidence that the overcharge 
      was not willful, the DHCR shall establish the penalty as the amount of 
      the overcharge plus interest from the date of the first overcharge on or 
      after April 1, 1984.

      In the instant case, the owner has not submitted sufficient evidence to 
      substantiate its claim that the overcharge was not willful.  The 
      evidence of record discloses that in April 1989 the owner was sent a 
      request for evidence in which it was stated that if an overcharge was 
      found and deemed to be willful "the owner will be directed to refund a 
      dollar amount three times the amount of the overcharge found."  
      Therefore contrary to the owner's contention on appeal, the owner 
      received notice of the possible imposition of treble damages in the 
      proceeding before the Rent Administrator.
      With regard to the owner's ancillary contention that the amending of the 
      original order was improper, the Commissioner notes that the tenant had 
      filed a separate petition for administrative review as well as a Request 
      for Reconsideration within the 35 day period specified, therefore, this 
      contention is rejected as without merit. 

      Because this determination concerns lawful rents only through           
      October 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.

      This order may, upon the expiration of the period in which the owner may 
      institute a proceeding pursuant to Article 78 of the Civil Practice Law 
      and Rules, be filed and enforced in the same manner as a judgment or not 
      in excess of twenty percent per month thereof may be offset against any 
      rent thereafter due the owner.

          EC 410480 RO; DK 410040 RT; DK 410018 RO

      THEREFORE, in accordance with the provisions of the Rent Stabilization 
      Law and Code, it is

      ORDERED, that the owner's petitions for administrative review be, and 
      the same hereby are, denied, the tenant's petition is terminated, and, 
      that the amended order of the Rent Administrator be, and the same hereby 
      is affirmed.


                                      JOSEPH A. D'AGOSTA
                                      Acting Deputy Commissioner


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