EG 220190-RO
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          -----------------------------------X S.J.R. No. 6000 (Mandamus)
          APPEAL OF                            DOCKET NO.: EG 220190-RO

               Wai Leung Chan,                 RENT ADMINISTRATOR'S
                                               DOCKET NO.: ZAF-210290-R
                                               Tenant: Amy Neifeld


          On July  18,  1990  the  above  named  petitioner-owner  filed  a
          Petition for Administrative Review against  an  order  issued  on
          June 15, 1990 by the Rent Administrator, 92-31 Union Hall Street, 
          Jamaica, New York  concerning  housing  accommodations  known  as
          Apartment 3 at 5216 8th Avenue, Brooklyn, New  York  wherein  the
          Rent Administrator determined that the owner had overcharged  the

          The issue in this appeal  is  whether  the  Rent  Administrator's
          order was warranted.

          The applicable sections of the Law are Sections 26-504(c) and 26 
          516 of the Rent Stabilization Law and Section  2526.1(a)  of  the
          Rent Stabilization Code.

          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 appeal.

          This proceeding was originally commenced by the filing  in  June,
          1986 of a rent overcharge complaint by the tenant, in  which  she
          stated that she had commenced occupancy on May 27, 1986 [actually 
          March 27, 1986, according to the lease] at a rent of $425.00  per
          month, and that other tenants  in  the  building  had  shown  her
          registration forms indicating that  they  were  subject  to  rent

          The (former) owner was served with a copy of  the  complaint  and
          was requested to submit rent records to prove the  lawfulness  of
          the rent being charged.  In answer to the complaint,  he  claimed
          that the subject apartment had been  destabilized  by  a  vacancy
          since it was in a building containing only five (5) apartments.

          On December 22, 1987 the present owner,  the  petitioner  herein,
          was served with a copy of the tenant's complaint and requested to 
          submit  proof  of  service  of  the  initial   registration   and
          documents to support the claim that the subject premises was  not
          subject to rent stabilization.  In answer, the owner stated  that
          the building had  four  apartments  and  that  he  bought  it  on
          November 11, 1986.

          EG 220190-RO

          The tenant stated that the former owner had informed her that the 
          building was stabilized because it had a tax abatement.

          A DHCR inquiry to the J-51 Program unit  of  the  New  York  City
          Department  of  Housing  Preservation  and  Development  elicited
          evidence that the building started receiving J-51 benefits in the 
          1978-79 tax year, that the exemption was for up to  twelve  years
          and that the abatement was for up to twenty years.

          In an order issued on June 15, 1990 the Administrator  determined
          that the building was subject to the Rent Stabilization  Law  and
          that the tenant had been overcharged in the amount of  $24,476.66
          as of June 30, 1990, such overcharge being  calculated  by  using
          the April 1, 1984 rent of $230.00 as the Initial Legal  Regulated
          Rent, barring the owner from collecting any increase on or  after
          April 1, 1986 due to his failure register the  subject  apartment
          for 1986, 1987 and 1988, and imposing treble damages.

          In this petition,  the  owner  contends  in  substance  that  the
          Certificate of Occupancy shows only five (5) residential units in 
          the subject building, so the building  is  not  subject  to  rent
          regulation; that he has never registered the  building  with  the
          DHCR, although the prior owner mistakenly did  so  because  of  a
          belief that the store and office  counted  towards  the  six  (6)
          units required for rent regulatory coverage; and that a  mistaken
          registration of a building otherwise exempt from rent  regulation
          by virtue of having fewer than six (6) units does  not  serve  to
          bring it within the ambit of the rent regulatory system.

          In answer, the tenant asserts in substance that her apartment  is
          subject  to  Rent  Stabilization  by  virtue  of  receiving  J-51

          The Commissioner is of the opinion that this petition  should  be

          Section 2(f)(8) of the former Rent Stabilization Code included in 
          its  definition  of  dwelling   units   covered   by   the   Rent
          Stabilization Code those dwelling units which 
               "are subject to regulation  solely  as  a  condition  of
               receiving or continuing to receive benefits pursuant  to
               Section J51-2.5 of the Administrative Code of  the  City
               of New York, as amended by Local  Law  60  of  1975,  so
               long as such benefits are  being  received,  or  because
               rehabilitated with a loan under Article 14 or 15 of  the
               Private  Housing  Finance  Law,  including  a  structure
               which contains less than 6 dwelling units, or  which  is
               not a class A multiple dwelling..."

          Section J51-2.5 of the Administrative Code of  the  City  of  New
          York, as amended by Local Law 60 of 1975, provided  in  pertinent
          part that J-51 benefits would apply, where  the  application  was
          filed  on  or  after  January  1,  1976,  only  to  buildings  or
          structures  converted  to  a  class  A   multiple   dwelling   or
          substantially rehabilitated where the  rents  subsequent  to  the
          conversion or  substantial  rehabilitation  did  not  exceed  the
          amount fixed by the city rent agency.  Sections 11-243(d)(2) and
          11-243(t)  of  the  current  Administrative  Code  continue  that

          EG 220190-RO
          requirement, requiring registration with the DHCR  and  providing
          that the apartment rents are subject to regulation so long as tax 
          benefits are being received.  Section 2520.11(o) of  the  current
          Rent Stabilization  Code  in  pertinent  part  exempts  from  its
          coverage apartments in buildings containing fewer  than  six  (6)
          housing accommodations where the receipt of J-51 tax benefits has 
          concluded and where the apartment is either vacant or  where  the
          tenant in occupancy at  the  time  J-51  benefits  end  has  been
          notified in every lease of the date  that  rent  regulation  will
          end.  In the present case the evidence in  the  record  indicates
          that the subject building began receiving J-51  benefits  in  the
          1978-79 tax year. A subsequent  inquiry  to  the  New  York  City
          Finance Department has revealed that the subject  building  ended
          its receipt of J-51 benefits as of July 1, 1989.  However,  since
          the leases in the record do  not  indicate  that  the  owner  was
          including  the  notice  required  to  destabilize   the   subject
          apartment at the expiration  of  the  receipt  of  J-51  benefits
          (indeed, the petitioner's  submissions  do  not  even  evince  an
          awareness that the benefits were  being  received),  the  subject
          apartment will remain subject to the Rent  Stailization  Law  and
          Code until the complainant vacates.

          Because of the possibility that the rents charged the complainant 
          were not reduced after the Administrator's order,  the  owner  is
          cautioned to adjust the rent, for periods after those  considered
          by the Administrator, to amounts no greater than that  determined
          by the Administrator's order plus any lawful  increases,  and  to
          register any adjusted rents with the Administrator's order  being
          given as the reason for the adjustment.  

          This order is issued without prejudice to any  rights  which  the
          owner may have against the prior owner in a  court  of  competent

          This order may, upon the expiration of the period  in  which  the
          owner may institute a proceedi g  pursuant  to  Article  seventy-
          eight of the civil practice law and rules, 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.

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

          ORDERED, that this petition be, and the same  hereby  is,  denied
          and that the Rent Administrator's order be, and the  same  hereby
          is, affirmed.  The total overcharge, including excess security of 
          $168.29, is $24,476.66 as of June 30, 1990.


                                                       ELLIOT SANDER
                                                       Deputy Commissioner

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