Adm. Review Docket Number: EJ 210028 RO
                                 STATE OF NEW YORK
                           OFFICE OF RENT ADMINISTRATION
                                    GERTZ PLAZA
                              92-31 UNION HALL STREET
                              JAMAICA, NEW YORK 11433

        APPEAL OF                           :  ADMINISTRATIVE REVIEW    
                                            :  DOCKET NO.: EJ 210028-RO
             JACOB KEMPLER,                 :  
                                            :  DRO DOCKET NO.: ZDA 210547-S 
                              PETITIONER    : 

        On October 3, 1990, the above-named owner filed  a  timely  petition
        for administrative review of an order issued on September  26,  1990
        concerning t e  housing  accommodations  relating  to   the   above-
        described docket number.  

        The issue herein is whether  the  Administrator's  order  under  the
        above-described docket number is warranted.

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

        On January 2, 1989, the tenant commenced this proceeding  by  filing
        a complaint asserting that the owner had failed to maintain  certain
        services in the subject apartment, namely:

             1)   no hot water;
             2)   inadequate heat;
             3)   inoperable intercoms; and
             4)   leaks in the bathroom pipes.

        On February 15, 1989, the petitioner-owner was mailed a copy of  the
        tenant's  complaint.   Although  duly  notified  to   do   so,   the
        petitioner-owner failed to answer the tenant's complaint.

        On July 30,  1990,  an  inspection  of  the  subject  apartment  was
        conducted by a D.H.C.R. inspector, who confirmed  the  existence  of
        defective conditions, to wit:

            "1)   Inadequate hot water temperature in bathroom
                  80 degrees.

             2)   Intercom inoperable (Can't hear visitors)."
        The Rent Administrator directed on September 26, 1990 restoration of 
        these services and further ordered a  reduction  of  the  stabilized

        In its petition for administrative  review,  the  owner  states,  in
        substance, that D.H.C.R. has no jurisdiction in  this  case  because
        the subject  premises  is  a  cooperative  building;  and  that  the

        Adm. Review Docket Number: EJ 210028 RO
        services in question have been restored.

        In answer to the owner's petition, the tenant denied the allegations 
        of the owner's petition.

        Before  the  court  remand,  the  Commissioner  denied  the  owner's
        petition in an order issued on  March  5,  1991  because  the  owner
        failed to prove 1) that the tenant in  question  was  subject  to  a
        subscription agreement which provided that if she failed to buy  the
        shares to her apartment, she would lose the right to remain  in  the
        apartment; 2) that the tenant is not a rent stabilized  tenant;  and
        3) that diminutions of service as  found  by  inspection  have  been

        Thereafter, the owner filed an Article  78  proceeding  against  the
        March 5, 1991 order, which was then remanded  to  DHCR  for  further

        Upon remand, the Commissioner is of the opinion  that  the  petition
        should be granted in part, to the extent that the apartment  is  not
        subject to  stabilization  if  the  tenant  were  evicted  from  the
        apartment, and that the Commissioner's  order  under  docket  number
        EJ-210028-RO issued on March 5, 1991 should be modified accordingly.

        Section 2522.5 (h)(4)(i) of the Rent Stabilization Code specifically 
        authorizes interim  leases  in  non-eviction  plans.   It  expressly
        provides, in pertinent part:

                  "[I]f a vacancy lease herein called an interim
                  lease for [a] housing accommodation [subject
                  to this Code] is executed in connection with
                  an agreement to purchase such housing accom-
                  modation or the shares allocated thereto,
                  pursuant to any eviction plan or non-eviction
                  plan, as defined by Section 352-eeee, such
                  interim lease:

                       (i) may provide that once the plan has
                  been declared effective, if the tenant fails
                  to purchase his or her housing accommodation
                  or the shares allocated thereto on the terms
                  set forth in the subscription or purchase
                  agreement, or otherwise terminates or defaults
                  on the subscription or purchase agreement,
                  such tenant may be evicted."

        By a supreme court decision (Kings County, IAS  Part  13,  Dowd  J.,
        Index No. 17619/89) issued on March 7, 1990, the  tenant  was  found
        not to be rent stabilized tenant, not entitled to a renewal lease 
        and subject to eviction for defaulting in a subscription agreement.

        As the Court noted in its memorandum  decision  in  said  proceeding
        entitled Goodman  v. 303 Beverly  Owners  Corp.,  (Sup.  Ct.,  Kings
        County, 1990)  (Dowd,  J.),  the  Rent  Stabilization  Code  Section
        2522.5(h)(4)(i) authorizes interim leases in non-eviction plans  for
        conversion to coop or condo ownership.  Under this  section  of  the
        Code, a tenant who takes occupancy after the filing of  an  offering
        plan and before the conversion  may  execute  an  interim  lease  in

        Adm. Review Docket Number: EJ 210028 RO
        connection with buying shares to purchase the housing accommodation. 
        In such interim lease, this Code Section states that such lease  may
        contain a provision that if a tenant fails to purchase,  the  tenant
        may be evicted.

        The Court's  decision  in  Goodman  v.  303  Beverly  Group,  supra,
        correctly determined that  pursuant  to  the  above  provision,  the
        tenant could be evicted upon  her  failure  to  purchase.   However,
        while this decision and law is relevant to the issue of the eviction 
        of the tenant, it does not dispose of  the  issue  of  defining  the
        status of the subject apartment or the status of  the  tenant  while
        she continues to remain in the apartment.

        In the case at bar, it is undisputed that the tenant took  occupancy
        prior to the effective date of the conversion of a  rent  stabilized
        building to a cooperative.  Thus, at the time  she  took  occupancy,
        the apartment was rent stabilized in accordance with Section 2520.11 
        of the Rent  Stabilization  Code.   Section  2520.11  (1)  does  not
        provide an exemption for the apartment since at this point in  time,
        ownership  of  the  building  had  not  been  transferred   to   the
        cooperative.   See  also:   Section  26-504  a  (1)   (c)   of   the
        Administrative Code of the City of New York.

        The question of the tenant's status while in occupancy  is  governed
        by the same provision of the  Code  which  authorizes  the  tenant's
        eviction for failure to purchase.  Section 2522.5(h)4 provides that:

                  ...such housing accommodation may only be
                  rented under such terms and conditions as
                  are authorized under this Code for a
                  vacancy lease.

        This is consistent with Section 352-eeee of the General Business Law 
        which provides  that  a  non-purchasing  rent  regulated  tenant  in
        possession prior to a conversion under a non-eviction plan continues 
        to be subject to regulation and has all the rights  of  a  regulated

        In addition, with respect to the  provision  of  required  services,
        Section 2522.5(h) 6 expressly provides that required services must 
        continue to be provided to regulated tenants who remain in 
        possession after the conversion.

        The record demonstrates and it  is  not  disputed  herein  that  the
        subject building is subject to stabilization, the complaining tenant 
        took occupancy of the subject apartment prior to the effective  date
        of the non-eviction plan and the tenant did not purchase  shares  to
        the  apartment.   Accordingly,  the  tenant  is  subject   to   rent
        stabilization while she remains in occupancy.  The  Court  correctly
        held that the owner would be entitled to evict the tenant upon her 
        failure to purchase.  However, until  the  tenant  is  evicted,  the
        apartment remains subject to stabilization and the owner must  abide
        by the rent stabilization law  which  includes  the  maintenance  of
        required services.  

        It is noted that on November 1, 1990, the  Administrator  issued  an

        Adm. Review Docket Number: EJ 210028 RO
        order under Docket No.  ZDH  210913  S,  finding  that  the  subject
        apartment is not subject to rent stabilization because  the  "tenant
        purchased said apartment."  Although this order has been reopened on 
        February 5, 1991, the Commissioner notes that more than twenty  days
        have elapsed  for  the  parties  involved  to  present  evidence  in
        connection therewith.

        It is further noted that  the  tenant  had  raised  issues  of  fact
        regarding,  inter  alia,  the  owner's  failure  to  cure  defective
        conditions and disputing her obligation to pay rent.  Because  there
        is a non-payment summary proceeding to recover rent payments for the 
        apartment at issue brought by the owner against the  tenant  in  the
        Civil Court (Kings County), the issues  raised  concerning  tenant's
        obligation to pay rent will be resolved therein.

        However, the owner's original petition in the above-described docket 
        number with respect to said defective conditions does not make clear 
        whether it is the owner's contention  that  repairs  had  been  made
        before the apartment was inspected  or  the  order  was  issued,  or
        whether the contention is  that  repairs  were  made  following  the
        issuance of the Administrator's order.  If it is  the  former,  then
        the owner's allegation  is  belied  by  the  report  of  the  agency
        inspector  on  July  30,  1990.   If   it   is   the   latter,   the
        Administrator's order reducing the  rent  was  nevertheless  correct
        when issued.

        Accordingly, the Commissioner grants the owner's petition in part to 
        the extent that the apartment is not subject to stabilization if the 
        complainant-tenant was evicted from the subject apartment.  However, 
        the Commissioner also affirms the Administrator in its March 5, 1991 
        order that  as  long  as  the  complainant  tenant  remains  in  the
        apartment, it is stabilized.

        Because the order appealed from states that the owner  must  provide
        required services and that the apartment was  rent  stabilized,  the
        Commissioner now enunciates  in  this  modified  Order  and  Opinion
        finding that the complainant tenant still resides in this  apartment
        and is thus  rent-stabilized;  that  the  apartment  is  subject  to
        stabilization for as long as the complainant tenant remains  in  the
        apartment; and that the owner must provide required services to  the
        complainant-tenant as long as the complainant-tenant remains in  the
        apartment and is not evicted by the owner.

        This modified Order and Opinion is issued without prejudice  to  the
        parties' rights in the Civil Court (Kings County)  proceeding  (i.e.
        for the owner's recovery of rent payments or proceeding for eviction 
        of complainant-tenant, and for the  tenant's  counterclaim  of  rent
        abatement due to existence of defective conditions).

        This modified Order and Opinion is also issued without prejudice  to
        the parties'  rights  to  file  appropriate  applications  for  rent
        restoration/reduction due to restoration/loss of  services,  if  the
        facts so warrant.

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

        ORDERED, that this petition for administrative review  be,  and  the

        Adm. Review Docket Number: EJ 210028 RO
        same hereby  is,  granted  in  part,  and  that  the  order  of  the
        Administrator be, and the same hereby,  is  modified  in  accordance
        with this Order and Opinion.


                                        ELLIOT SANDER
                                        Deputy Commissioner


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