EI-410080-RO
                                  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
          IN THE MATTER OF THE ADMINISTRATIVE     ADMINISTRATIVE REVIEW
          APPEAL OF                               DOCKET NO.:   
                                                  EI-410080-RO
                 JOEL                                              ARAGONA,
                                                  DISTRICT RENT ADMIN.
                                                  DOCKET NO.:
                                  PETITIONER      CB-410121-R 
          ----------------------------------x



            ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW  
                                       IN PART



          On September 7, 1990, the above named petitioner-owner,  filed  a
          Petition for Administrative Review against  an  order  issued  on
          August 22, 1990, by  a  Rent  Administrator   concerning  housing
          accommodations, known as Apartment 8 at 328 West 89th Street, New 
          York, New York, wherein the Rent  Administrator  determined  that
          the subtenant had been overcharged,  and  that  such  overcharges
          were willful.       

          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 of a  rent
          overcharge complaint by the subtenant on February 2, 1988.

          The subtenant had taken occupancy on September  1,  1986  at  the
          commencement of the second-year of the primary tenant's  two-year
          lease.  The primary  tenant's  lease  ran  from  September,  1985
          through August 1987, at a rent of $500.12.   The  subtenant  paid
          $537.63 from September 1986 through the end of  the  lease.   The
          subsequent two-year lease, commencing in September 1987  was  for
          a monthly rental of $583.29.



          On September 11, 1987, immediately after  the  execution  of  the
          lease, the District Rent Administrator issued Order Number 
          L-3115177-R, based on the overcharge complaint  previously  filed
          by the primary tenant.  The order directed a refund of $2,217.87, 
          to the primary tenant and adjusted  the  legal  rent  to  $424.31
          through the lease term ending on August  31,  1985.   This  order
          did not impose treble damages.







          EI-410080-RO
          On March 15, 1988, the owner answered the subtenant's  complaint,
          stating therein that it had sent a  full  refund  for  the  over-
          charges determined for the primary tenant on  October  23,  1987;
          and that, on January 29,  1988,  it  had  sent  the  subtenant  a
          corrected rent schedule for the period  the  subtenant  had  been
          overcharged based on the legal rent in  the  Order  of  September
          11, 1987.

          On August 22, 1990, the District Rent Administrator issued  Order
          Number CB-410121-R, in which it was determined that the subtenant 
          had been overcharged  for  the  period  from  September  1,  1986
          through August 31, 1989 in the amount of  $1,586.88.   The  order
          also stated that the evidence indicated that the  overcharge  was
          willful and, as a result, treble damages would be  imposed.   The
          total amount of overcharges was thus increased to $4,760.64.  The 
          legal registered rent was determined as  $538.82  for  the  lease
          term ending on August 31, 1989.

          In its petition dated September 7, 1990, the owner contends  that
          the Administrator's order was improper in  that  it  had  already
          refunded the overcharges before  the  subtenant  filed  the  com-
          plaint, as was documented in its answer of March 15, 1988.   Fur-
          thermore, the owner contends  that  the  determination  that  the
          overcharges had been willful is totally refuted by the  facts  in
          the record. The petition also proposes a revised  calculation  of
          the legal rent in which the rent for the 9/1/86 lease is  $497.17
          instead of $494.33, and the rent for the 9/1/87 lease is  $541.91
          instead of $538.82.

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

          Section 2525.6(e) of the current Rent Stabilization Code provides 
          that, upon the consent of the owner to a sublet or an  assignment
          of any lease, the legal  regulated  rent  payable  to  the  owner
          effective upon the  date  of  subletting  or  assignment  may  be
          increased by the vacancy allowance, if any, provided in the  Rent
          Guidelines Board Order in effect at the time of the  commencement
          date of the lease, provided the lease is a renewal lease.  Such 



          increase in the case of an assignment shall remain part of the 
          legal regulated rent for any subsequent renewal  lease;  however,
          in the case of a subletting, upon termination  of  the  sublease,
          the legal regulated rent shall  revert  to  the  legal  regulated
          rent without the sublet vacancy allowance.  

          In the instant case, the record below clearly indicates that  the
          owner made genuine efforts to adjust the legal rent and to refund 
          overcharges to the subtenant in response to the overcharge
          order for the primary tenant, which had been issued on  September
          11, 1987, five months before the subtenant's complaint was filed. 
          The Rent Administrator had been informed of this in  the  owner's
          answer of March 15, 1988. In recognition of  these  efforts,  The
          Commissioner finds that the  imposition  of  treble  damages  was
          improper.  

          Additionally, the Commissioner notes that as of the date of issu 






          EI-410080-RO
          ance of this Order and Opinion, the whereabouts of the tenant and 
          the subtenant are unknown.  Since  the  owner's  claim  that  all
          overcharges were either refunded or credited to the subtenant  is
          undisputed, the Administrator's order will  be  amended  to  show
          that no balance remains to be paid.

          The owner's proposed revision of the  rent  chart  is  incorrect,
          however, as it improperly uses the legal rent of the 9/1/86 lease 
          as the base to calculate the 7.5% vacancy  increase,  instead  of
          the 9/30/84 rent that was correctly used  by  the  Administrator.
          This mistake, in turn,  created  an  overcharge  for  the  9/1/87
          lease, which was duly noted in the Administrator's calculations. 

          A copy of this Order and Opinion will  be  sent  to  the  current
          occupant of the subject apartment.


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

          ORDERED, that the owner's petition be  and  the  same  hereby  is
          granted in part; and that the Administrator's order be,  and  the
          same hereby is revised in accordance with this Order and Opinion.


          ISSUED:



                                                                           
                                                JOSEPH A. D'AGOSTA
                                                Deputy Commissioner
    

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