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

          APPEAL OF                              DOCKET NO.:  EH  710124-RO
                                                 DRO ORDER NO.: ED-710086-R 
               THE                  BECHTOLDT                  CORPORATION,
                                                  TENANT: Virginia Sherred

                              PETITIONER      : 

                                       IN PART

               On August 10, 1990 the above named petitioner-landlord filed 
          a Petition for Administrative Review against an order  issued  on
          July 10, 1990 by the  District  Rent  Administrator,  50  Clinton
          Street, Hempstead, New  York  concerning  housing  accommodations
          known as Apartment C4 at 100  Jerusalem  Avenue,  Hempstead,  New
          York wherein the District Rent Administrator determined that  the
          landlord had overcharged the tenant.

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

               The applicable sections of the Law are  Sections  35,  36,64
          and 71 [9 NYCRR 2502.5(c), 2502.6,  2505.4  and  2506.1]  of  the
          Tenant Protection Regulations.

               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
          April, 1990 of a rent overcharge  complaint  by  the  tenant,  in
          which she stated that she had commenced occupancy on February  8,
          1986 at a lease rent of  $681.86  per  month,  although  she  was
          charged $687.63, and that she had  paid  a  security  deposit  of

               In an order issued  on  July  10,  1990  the  District  Rent
          Administrator found that, while the lease rents were lawful,  the
          owner had prematurely collected an increase for a  Major  Capital
          Improvement (M.C.I.) during the tenant's  initial  2-year  lease,
          although it was not entitled to collect it until the next  lease.
          The order directed a refund of $124.66 for that overcharge and of 
          $767.82 in excess security. 

          ADM. REVIEW DOCKET NO.: EH 710124-RO
               In this petition, the landlord contends  in  substance  that
          the tenant is actually requesting a return of one  month's  worth
          of the original rent of $681.63, and not of the current  rent  of
          $767.82; and that the order should be  dismissed  as  the  tenant
          waited more than four years to commence the proceeding.

               In answer, the tenant asserts in substance that the  present
          and former landlords knew that they were  overcharging  her;  and
          that she had received no reply from the  landlord  after  filling
          out an investigation report in reference to the security.

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

               Section 71 [9 NYCRR 2506.1(a)(2) and 2506.1(a)(3)(i)] of the 
          Tenant Protection Regulations provides in pertinent part that: 

                    (2) A complaint pursuant to this section must  
               be filed with the division within four years of the 
               first overcharge alleged, and no award of the amount
               of an overcharge may be based upon an overcharge  
               having occurred more than four years before the 
               complaint is filed,
                    (3) (i) Except as to complaints filed pursuant
               to subparagraph (ii) of this paragraph, the legal
               regulated rent for purposes of determining an over-
               charge shall be deemed to be the rent shown in the  
               annual registration statement filed four years prior
               to the most recent registration statement (or, if
               more recently filed, the initial registration state-
               ment), plus in each case any subsequent lawful in-
               creases and adjustments.

               The phrase "[a] complaint pursuant to this section  must  be
          filed with the division within four years of the first overcharge 
          alleged" does not  mean,  as  contended  by  the  owner,  that  a
          complaint concerning overcharges occurring more than four years 

          prior must be dismissed  in  its  entirety,  but  only  that  the
          earlier overcharges are ignored.  Since the tenant filed her 
          complaint in April, 1990, overcharges are  considered  only  from
          April 1, 1986, four years prior to the complaint.  The base  rent
          is $681.87, the registered April 1, 1986 rent, four  years  prior
          to the April 1, 1990 registration.  While the owner had  actually
          been charging $686.63 from the inception of the lease on February 
          1, 1986, this was done without authorization from the  DHCR  (the
          M.C.I. order was not issued until September  23,  1986,  and  the
          rent increase could not be effective until October 1, 1986 at the 
          earliest), so it  does  not  affect  the  base  rent.  There  was
          therefore an overcharge of $4.76 per month the refund of which is 
          collectible by the tenant  from  April,  1986  rather  than  from
          February, 1986 as calculated by  the  Administrator.   While  the
          M.C.I. order would normally have allowed the M.C.I.  increase  to
          be effective on October 1, 1986,  the  first  rent  payment  date
          following the issuance of the M.C.I. order, since paragraph 24 of 

          ADM. REVIEW DOCKET NO.: EH 710124-RO
          the tenant's lease provided for rent increases during the term of 
          the lease by virtue of DHCR orders, there is no evidence  in  the
          record that the landlord complied with the provision  in  Section
          35 [9 NYCRR 2502.5(c)(3)]  of  the  Regulations  that  the  lease
          recite that an application is pending before the DHCR for a  rent
          increase.  The M.C.I. increase is therefore not collectible until 
          February 1, 1988, the beginning date of the next  lease,  so  the
          lawful rent remained $681.87 during  the  entire  course  of  the
          tenant's first lease.   The  rent  overcharge  for  the  22-month
          period from April 1,  1986  to  January  31,  1988  was  $113.39,
          including interest.     

               To the extent that the landlord may be contending  that  the
          tenant may not raise the issue of excess security because of  the
          4-year limit, such contention is rejected.  Section 64  (9  NYCRR
          2505.4) of the Regulations, which  provides  that  no  lease  may
          provide for security in excess of one month's rent unless it is a 
          renewal of a lease in effect on December 1,  1983  that  required
          such extra security, also provides that the landlord shall comply 
          with Section  7-103  of  the  General  Obligations  Law.   G.O.L.
          Section 7-103(1) provides that a security deposit "shall continue 
          to be the money of the person making such deposit or advance  and
          shall be held in trust by the person with whom  such  deposit  or
          advance shall be made and shall not be mingled with the  personal
          moneys or become an asset of the person receiving the same..."  A 
          security deposit, held in trust, is not "rent" for the purpose of 
          the 4-year limitation.      

               The  tenant's  complaint  claimed  that  the  landlord   had
          collected two month's rent as security.  While  this  represented
          excess security of $686.63 at the time of the tenant's complaint, 

          the lease renewals submitted during the course of the proceeding
          indicate that the landlord continued to collect enough additional 
          security (twice the lease rent increase) to  maintain  the  total
          security at  a  level  of  two  month's  current  rent.   It  was
          therefore proper for the Administrator to find that the  landlord
          held  excess  security  of  $767.82  as  of  the  time   of   the
          Administrator's order. 

               The tenant is therefore due a refund of $881.21 ($113.39  in
          overcharges plus $767.82 in excess security).  While  this  order
          changes the Administrator's  order  by  eliminating  two  months'
          worth of overcharges, it does not change the current lawful rent, 
          particularly  since  the  overcharge  occurred  only  during  the
          tenant's initial lease, and the subsequent rents through the time 
          of the Administrator's order were all lawful.

               This order may, 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, 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   Emergency   Tenant
          Protection Act of 1974 and the Tenant Protection Regulations,  it

          ADM. REVIEW DOCKET NO.: EH 710124-RO

               ORDERED, that this petition be,  and  the  same  hereby  is,
          granted in part and that the Administrator's order  be,  and  the
          same hereby is,  modified  in  accordance  with  this  order  and


                                          ELLIOT SANDER
                                          Deputy Commissioner



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