DOC. NO.: EE 310481-RO
STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. EE 310481-RO
HARBOR GARDENS ASSOCIATION, : DRO DOCKET NO.: ZBH-310110R
PETITIONER : TENANT-JOHN HARAMIS
ORDER AND OPINION GRANTING PETITION FOR
ADMINISTRATIVE REVIEW IN PART
On May 15, 1990, the above-named petitioner filed a Petition for
Administrative Review against an order issued on April 24, 1990 by the
Rent Administrator, 92-31 Union Hall Street, Jamaica, New York
concerning the housing accommodation known as 41 Crescent Avenue,
Staten Island, New York, apartment I-2 wherein the Administrator
determined that an overcharge had occurred and directed the owner to
refund overcharges of $4,065.70, inclusive of excess security,
interest and treble damages on the overcharge.
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 in the administrative appeal.
The tenant commenced this proceeding on August 4, 1987 by filing a
complaint of rent overcharge, alleging that the rent of the prior
tenant had been substantially lower than the rent the tenant was
paying and that the owner had not justified the large increase in
rent. The tenant stated that he had taken occupancy of the subject
apartment on November 1, 1986 pursuant to a one year lease terminating
October 31, 1987 at a rent of $657.44.
A copy of the complaint was sent to the owner.
In reply, the owner submitted a complete rental history, including
copies of leases, the 1986 apartment registration on which were
indicated numerous improvements made to the apartment, and an order
which granted a rent increase for a Major Capital Improvement (M.C.I).
The owner stated that the rent included the cost of rehabilitating the
apartment and the cost of installing new appliances therein. The
owner also submitted a copy of its computation which determined the
rent to be collected.
DOC. NO.: EE 310481-RO
In the order issued on April 24, 1990, the Administrator established
the lawful stabilized rent at $630.54 effective February 1, 1988 and
directed the owner to refund overcharges of $4,065.70 including excess
security, interest and treble damages.
In the appeal, the owner requests that the order be modified to
exclude the assessment of treble damages. The owner contends that no
evidence to establish willfulness was presented and that the order
itself is ambiguous in that only interest was checked off on the front
of the order whereas both interest and treble damages were included in
the amount to be refunded. The petitioner requests that the order be
further modified to allow one fortieth of the cost ($864.71) of
sanding and refinishing all the floors to be included in the rent as
In reply, the tenant requests that the petition be denied and contends
that there is ample evidence of the owner's willfulness in
The Commissioner is of the opinion that this petition should be
granted in part.
Section 26-516 of the Rent Stabilization Law, as amended by the
Omnibus Housing Act of 1983, provides that any owner who is found to
have collected an overcharge "... shall be liable to the tenant for a
penalty equal to three times the amount of the overcharge. 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."
The Rent Stabilization Law assesses treble damages where the
overcharge is "willful". The statute, in fact, creates a presumption
of willfulness subject to rebuttal by the owner showing non-
willfulness of the overcharge by a preponderance of the evidence.
DHCR has determined that the burden of proof in establishing lack of
willfulness shall be deemed to have been met and, therefore, the
treble damage penalty is not applicable, in some situations, where, it
is apparent or where it is demonstrated that an overcharge occurred
under certain specified circumstances, such as where the overcharge is
caused by the hypertechnical nature of the rent computation. See
Policy Statement 89-2.
DOC. NO.: EE 310481-RO
An example of this type of overcharge is present where the rent
guideline increases were computed on the September 30th rent plus a
"supplementary adjustment", e.g., a rent increase for new equipment
installed which became effective after September 30th, instead of
first calculating the guidelines increases and then adding the other
charges. The computation submitted by the owner discloses that the
overcharges collected in the instant case were the result of such a
hypertechnical rent computation. Accordingly, the Commissioner finds
the owner is deemed to have met its burden of proving lack of
willfulness and thus further finds that the imposition of treble
damages was inappropriate in the instant case. Moreover, since
interest on the overcharge collected on and after April 1, 1984 is
assessed in all cases where the treble damages penalty does not apply,
the Commissioner finds that the assessment of interest is appropriate.
Accordingly, the Commissioner modifies the order to remove the treble
damages penalty and to direct the owner to refund overcharges of
$1457.66 inclusive of excess security and interest but retains the
lawful stabilized rent, $630.54 as of February 1, 1988, as established
by the Administrator.
Under the Code, sanding and refinishing floors do not constitute
improvements but are considered normal maintenance and repair.
Accordingly, the Commissioner finds that the Administrator properly
did not allow this cost to be included as an improvement for a rent
Since the tenant has vacated the subject Apartment, a copy of this
order is being sent to the current tenant.
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,
this order may be filed and enforced as judgment.
THEREFORE, in accordance with the Rent Stabilization Law and Code, it
ORDERED, that this petition be, and the same hereby is, granted in
part and the order of the Rent Administrator be, and the same hereby
is, modified in accordance with this order and opinion.