EJ 410272-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. EJ 410272-RO

                                          :  DISTRICT RENT OFFICE
                                             DOCKET NO. ZED-410004-RP
           East 7th Street Associates,                  (DB-410071-RT)
                                                        (ZBC-410326-R)
                                            
                                             TENANT: Jed Zuckerman            
           
                            PETITIONER    : 
      ------------------------------------X                             

           ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
                                         

      On October 24, 1990, the above-named petitioner-owner filed a Petition 
      for Administrative Review against an order issued on September 20, 1990, 
      by the Rent Administrator, 92-31 Union Hall Street, Jamaica, New York, 
      concerning the housing accommodations known as 199 East 7th Street, New 
      York, New York, Apartment No. 2B, wherein the Rent Administrator 
      determined that the owner had overcharged the tenant.

      The issue herein is whether the Rent Administrator's order was 
      warranted.

      The applicable sections of the Law are Section 26-516 of the Rent 
      Stabilization Law and Sections 2521.1, 2526.1(a), 2527.9(a), and 2528.2 
      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 March, 1987 of 
      a rent overcharge complaint by the tenant, in which he stated that he 
      had commenced occupancy pursuant to a lease commencing November 1, 1983 
      at a rent of $568.88 per month.

      The owner was served with a copy of the complaint and was requested to 
      submit an answer.  In reply, the owner asserted in substance that the 
      tenant commenced occupancy of the subject apartment in 1983; that the 
      subject apartment was registered with the Division of Housing and 
      Community Renewal (DHCR) in June of 1984; that a copy of the 
      registration form was served on the tenant, who never challenged the 
      initial rent; that therefore the Initial Legal Regulated Rent was 
      established as the $568.88 being charged on April 1, 1984; that the 
      tenant's complaint of rent overcharges was not a challenge to the 
      Initial Legal Regulated Rent; and that the owner included copies of the 
      tenant's leases from November 1, 1983, an Apartment Registration Form 







          EJ 410272-RO

      (Form RR-1), and a copy of a certified letter to the tenant which was 
      returned by the post office on July 22, 1984 as unclaimed or refused 
      after two notices.

      In Order Number ZBC-410326-R, the Rent Administrator determined that the 
      owner had registered the April 1, 1984 rent, and had served the tenant 
      with a copy of the Apartment Registration Form; that the tenant had not 
      filed a timely Tenant Objection to the April 1, 1984 rent; that 
      therefore the rent of $568.88 being charged on April 1, 1984 was the 
      Initial Legal Regulated Rent; and that the owner had taken only a lawful 
      increase in the subsequent lease. 

      In his petition (Docket No. DB 410071-RT) against that order, the tenant 
      contended in substance that he did not receive a registration form for 
      1984 or 1985, and that upon receipt of the form for 1986 he filed a 
      timely complaint of rent overcharge.

      In answer, the owner asserted in substance that it properly registered 
      the apartment in June, 1984 and served a copy of the registration form 
      on the tenant by certified mail; that the tenant was alleging that the 
      owner did not serve him with the registration form; and that the tenant 
      was raising the same issues which were raised in his complaint and which 
      were properly determined against the tenant by the Administrator.

      On June 21, 1989 the owner was requested to submit additional proof of 
      mailing to the tenant of the 1984, 1985, 1986 and 1987 apartment 
      registrations, as well as affidavits describing any other attempts made 
      to serve the tenant when it became apparent that the mailed apartment 
      registration(s) had not been delivered to him.  The owner was also 
      requested to submit leases from April 1, 1980 until the time of the 
      tenant's first lease.  The file of that appeal proceeding does not 
      contain any response by the owner.

      In an order issued on March 30, 1990 the proceeding was remanded to the 
      Rent Administrator to be processed as an overcharge complaint filed 
      within 90 days after the initial registration of the subject apartment, 
      on the grounds that the owner's use of certified mail, which was not a 
      delivery method provided for in the instructions for the 1984 
      registration of apartments, imposed an additional barrier to the 
      tenant's actual receipt of the letter; that this resulted in the tenant 
      not getting the letter; that the owner was aware that it was returned 
      undelivered by the Postal Service; that this constituted a defective 
      registration; and that the owner had not responded to a June 21, 1989 
      request for evidence of other attempts to serve the 1984 or later 
      apartment registration forms on the tenant.

      The remanded proceeding was assigned Docket No. ED 410004-RP.  In that 
      proceeding the owner initially submitted leases only from November 1, 
      1983 (the commencement date of the complainant's initial lease), 
      contending that the April 1, 1984 rent of $568.88 was the initial 
      regulated rent since the tenant was served with the 1984 registration 
      form and did not object to the rent; that the 1985 and 1986 
      registrations contained the same information as the 1984 registration, 
      since the tenant's initial lease was from November 1, 1983 to October 
      31, 1986; that the owner does not have proof of mailing of the 1985 
      registration, but does have proof that the 1986 registration was mailed 
      on October 20, 1986; that the tenant's complaint was not received by the 
      DHCR until March 20, 1987, more than 90 days past that date, and was 


          EJ 410272-RO

      therefore untimely; that certified mail was a proper method of sending 
      the 1984 registration to the tenant; and that, contrary to the statement 
      in the Commissioner's order in Docket No. DB 410071-RT that no 
      additional proof of mailing of registrations was submitted in response 
      to the June 21, 1989 request, proof of the 1986, 1987 and 1988 mailings 
      was submitted to the DHCR on July 27, 1989.

      The owner later submitted leases from April 15, 1980, and claimed that 
      the tenancy prior to that date was rent controlled.

      In an order issued on September 20, 1990 the Administrator revoked the 
      January 27, 1989 order in Docket No. BC-410326-R; found that the 
      apartment was decontrolled on November 8, 1974; and used DHCR default 
      procedures to set the tenant's initial rent at $267.82 per month and to 
      find an overcharge of $75,594.50, including treble damages, as of 
      September 30, 1990 because the owner did not establish that no rent was 
      collected on April 1, 1980.

      In this petition against that order, the owner contends in substance 
      that the methods of service of the initial registration provided for in 
      the instructions were intended to substantiate delivery to the tenant, 
      post office or mailing house; that the certified mail receipt fulfills 
      such requirement of proof by showing that the registration was delivered 
      to the post office; that Section 26A of the former Rent Stabilization 
      Code, in effect at the time the initial registration was served, 
      provided that DC-2 Notices were to be served by certified mail; that the 
      DC-2 notice performs a function analogous to that of the initial 
      registration statement; that Section 2528.2 of the current Rent 
      Stabilization Code provides that the initial apartment registration form 
      shall be sent by the owner to the tenant by certified mail; that it 
      therefore would be arbitrary to hold that service by certified mail in 
      the present case was unduly burdensome; that the tenant clearly refused 
      to accept delivery of the registration, since the envelope was marked 
      "refused or unclaimed" despite the Postal Service giving the tenant two 
      notices regarding the letter; that in any event the Commissioner has 
      held that if an apartment was vacant on April 1, 1980, the first rent 
      charged and paid after that date becomes the base rent; that a lease was 
      submitted commencing April 15, 1980; that it is obvious that the 
      apartment was vacant on April 1, 1980; that a complete rental history 
      has therefore been submitted, making it improper to use the default 
      procedure; that affidavits are now being submitted from the 
      superintendent and another tenant stating that the subject apartment was 
      vacant on April 1, 1980; and that the owner's attorneys had 
      communication with Ms. Valli Klingerman Timbert, the tenant on April 15, 
      1980, who communicated that several days prior to signing the lease and 
      moving into the apartment she inspected it and found it to be vacant.  
      With its petition the owner has enclosed affidavits from Mary Santiago, 
      the superintendent, and Hector Santiago in which they state that they 
      have resided in the subject building for 26 years, and that they have 
      personal knowledge that Apartment 2B was vacant from before March 31, 
      1980 to April 15, 1980.

      In answer, the tenant asserts in substance that he spoke with Mrs. 
      Bernard Feldman, the wife of the witness to the lease of Valli 
      Klingerman Timbert; that she stated that she and her son spoke to the 
      owner's attorney approximately two months previous; that she had told 
      the attorney only that Mrs. Timbert had lived in the building about that 
      time; that she stated that Mrs. Timbert probably cannot be contacted, as 







          EJ 410272-RO

      she has remarried, changed her name, and been living in France for three 
      years; that the superintendent, who is in the owner's employ, and her 
      son, the tenant of Apartment 1C, were probably misled and coerced by the 
      owner into making perjurious statements; that he is enclosing a lease in 
      effect from November 1, 1978 through October 31, 1980 at a rent of 
      $195.00 per month; that this alone is enough evidence of a rent 
      overcharge; and that it is also the lease in effect April 1, 1980 
      through April 15, 1980.  With his answer the tenant enclosed such a 
      lease made October 27, 1978 with someone whose name appears to be Susan 
      Davela, as well as affidavits from Mary Santiago and Hector Santiago 
      that they had no personal knowledge of the occupancy of Apartment 2B 
      between March 31, 1980 and April 15, 1980, that the owner East 7th 
      Street Development Corporation/Manouchehr Malekan coerced them into 
      signing statements stating that the apartment was occupied, that they 
      assumed he had records to that effect and was presenting them with true 
      facts, that they were told that the statements were in relation to co-op 
      proceedings and had no bearing on the complainant's case, and that they 
      wished their previous statements to be removed from evidence.  

      In response, the owner's attorney contends in substance that she stated 
      that her office had "communications" with Ms. Timbert; that this took 
      place by her cousin David Feldman; that Mr. Feldman stated that he had 
      spoken to his mother Mrs. Bernard Feldman as to Ms. Timbert's occupancy; 
      that Mr. Feldman stated that he would contact Ms. Timbert to see whether 
      she would be willing to sign a statement on the owner's behalf; that the 
      superintendent Mary Santiago is employed by the cooperative corporation 
      which actually holds title to the subject building, and not by East 7th 
      Street Associates, which owns the shares allocated to the subject 
      apartment and is not in a position to unduly influence Mary Santiago or 
      Hector Santiago; that although the tenant had a full rental history, he 
      withheld it from the DHCR until recently submitting the 1978 lease; that 
      such lease in any event substantiates that the premises was vacant on 
      April 1, 1980, since the tenant in that lease vacated prior to the 
      October 31, 1980 expiration date of the lease term and must also have  
      vacated prior to the April 15, 1980 commencement date of the next 
      tenant's lease; and that a hearing should be held if the DHCR does not 
      find it clear that the subject apartment was vacant on April 1, 1980.

      With her response the owner's attorney has enclosed an affidavit in 
      which she states that, when unable to contact Ms. Timbert directly, she 
      called the telephone number of Bernard Feldman; that she reached David 
      Feldman, who had notarized Bernard Feldman's signature; that he informed 
      her that his father Bernard Feldman had died; that he requested a copy 
      of the lease of Ms. Timbert, his cousin; that upon receipt of the lease 
      he advised her that he had spoken with his mother regarding Ms. Timbert; 
      that she informed his that Ms. Timbert had remarried and moved to 
      France; that David Feldman stated that he would contact Ms. Timbert to 
      see if she would submit a statement regarding her tenancy; that Ms. 
      Timbert has not forwarded such a statement; and that David Feldman 
      remembered helping Ms. Timbert move into the apartment and that he 
      believed the apartment was vacant when she inspected it prior to leasing 
      it.  The owner's attorney also states that the tenant's statement that 
      Mrs. Feldman stated that "no further conversation ensued" is lacking in 
      credibility as no conversation between the law firm and Mrs. Feldman 
      ever occurred, since all conversations were with her son, David Feldman; 
      and that the tenant may have failed to submit a signed statement from 
      Mrs. Feldman because he was unable to coerce her into signing a 
      statement as her statement would not substantiate the claims contained 


          EJ 410272-RO

      in his answer to the owner's petition.


      The owner's attorney also enclosed an affidavit from Manouchehr Malekan, 
      who states that he is a principal in East 7th Street Associates; that 
      Mary Santiago, the superintendent, and her son Hector have lived in the  
      building for 26 years; that after many conversations with Mary Santiago, 
      Hector Santiago, and Vincent Crissi, the previous owner of the building, 
      he learned that the subject apartment was vacant for a period of time 
      prior to the occupancy of the tenant whose lease commenced April 15, 
      1990; that he spoke with Mary and Hector Santiago on August 15, 1990 
      about signing an affidavit verifying that the subject apartment was 
      vacant in early April of 1980; that they both agreed to do so; that they 
      were not told that the statements were necessary for the cooperative; 
      that indeed the building had already been converted to a cooperative; 
      that East 7th Street Associates has no relationship with Hector Santiago 
      and could not have coerced him into signing an affidavit; that East 7th 
      Street Associates does not employ Mary Santiago, but is just the 
      shareholder of the shares allocated to Apartment 2B; that in November of 
      1990 Mary and Hector Santiago signed affidavits on behalf of the tenant; 
      that Hector Santiago later stated that the tenant had told him that this 
      proceeding was a court proceeding, and that he and his mother would now 
      be involved and forced to go to court because they had signed affidavits 
      for the owner; that Hector Santiago stated that he did not wish to be 
      involved in any court proceeding or appear in any court; and that it is 
      obvious that the tenant coerced Mary and Hector Santiago into recanting 
      their prior truthful statements by the use of threat and harassment.

      In reply, the tenant asserts in substance that he did not receive the 
      initial apartment registration; that he responded to the first one that 
      he did receive; that the owner's attorney's affirmation regarding a 
      conversation with Mr. David Feldman is of little value, since Mr. 
      Feldman insists that he did not contact his cousin Mrs. Valli Timbert 
      but that he only knows that she lived in the building "about that time'; 
      that Mary Santiago was employed by East 7th Street Associates until the 
      cooperative plan went into effect; that, while the cooperative 
      corporation now employs her, East 7th Street Associates is still the 
      major stockholder; that the lease he has submitted covers April 1 
      through April 15; and that it is not at all evident that the apartment 
      was vacant on April 1.

      In answer, the owner contends in substance that, even if the 1978 lease 
      expiring October 31, 1980 is genuine, it is obvious that, since that 
      tenant vacated in the middle of the lease term, it obviously took more 
      than two weeks for the prior owner to prepare and re-rent the apartment; 
      that there can be little doubt that the apartment was vacant on March 
      31, 1980; that an appellate court decision in Matter of Round Hill 
      Management noted that a finding of willfulness should not depend on the 
      mechanical application of formulas presuming a willful overcharge where 
      an owner has failed to provide complete records; that the owner had no 
      reason to suspect that the earliest lease it could obtain, commencing 
      more than 11 years ago, could represent an overcharge, and certainly had 
      no reason to suspect after service of the initial registration form that 
      the rent charged on April 1, 1984 was anything but a lawful rent; and 
      that it would be improper to impose treble damages.

      In a later answer, the owner asserts in substance that Hector and Mary 
      Santiago could not have been fearful of Mary Santiago losing her job if 







          EJ 410272-RO

      they did not sign affidavits for the owner, since signing affidavits for 
      the tenant could have the same effect on her job; that they could not 
      have believed that their affidavits signed for the tenant were for a 
      "co-op proceeding" and not a DHCR proceeding, since the affidavits had 
      DHCR captions and docket numbers; that in any case Mary Santiago knew 
      that the premises had already been converted, since she works for the 
      actual cooperative corporation which holds title to the premises; and 
      that all rent increases from April 15, 1980 to the present have used the 
      correct Guidelines increases.

      In a subsequent submission, the owner contends that Section 
      2526.1(a)(2)(ii) of the Rent Stabilization Code provides that any 
      complaint based upon overcharges occurring prior to the date of filing 
      of the initial registration must be filed within 90 days of the mailing 
      of the notice to the tenant of such registration, rather than the 
      tenant' receipt of the notice; that the registration was properly mailed 
      to the tenant, who refused it; and that in cases where a DC-2 notice was 
      mailed by certified mail to a tenant and the tenant refused receipt, the 
      DHCR held in such an instance that the mailing was proper and that the 
      tenant could not be unjustly enriched by the tenant's own action.

      The Commissioner is of the opinion that this petition should be denied 
      and that the Administrator's order should be modified.

      Section 9 NYCRR 2521.1(b)(1) of the Rent Stabilization Code provides in 
      substance that the Initial Legal Registered Rent shall be, for an 
      apartment for which the tenant files a timely challenge to the initial 
      registered rent in accordance with Section 9 NYCRR 2526.1(a)(3)(ii) of 
      the Code, the rent charged and paid on April 1, 1980 plus the lawful 
      increases charged and paid up to March 31, 1984.  Section 9 NYCRR 
      2526.1(a)(3)(ii) of the Code provides in pertinent part that as to 
      complaints of overcharge filed within 90 days of the initial 
      registration, the legal regulated rent for purposes of determining an 
      overcharge shall be deemed to be the rent charged and paid on April 1, 
      1980; or if the housing accommodation was subject to the Rent 
      Stabilization Law and Code for less than four years prior to the initial 
      registration then the initial legal regulated rent: plus in each case 
      any lawful increases and adjustments.

      As part of the requirements for the initial apartment registration, 
      Section 9 NYCRR 2528.2(d) of the Code effective May 1, 1987 provides 
      that:

           [o]ne copy of the initial Apartment Registration form which 
           pertains to the tenant's housing accommodation shall be sent by the 
           owner to the tenant by certified mail.  Service of such form 
           pursuant to this subdivision (d) together with the Notice of 
           Initial Legal Registered Rent shall constitute proper service of 
           such Notice of Initial Legal Registered Rent under section 2523.1 
           of this Title.  Provided however, that for registrations served 
           prior to the effective date of this subdivision (d), any method of 
           service permitted by the DHCR at the time of service shall be 
           deemed to have the same effect as service by certified mailing.

      It is the owner's position that certified mailing of the 1984 apartment 
      registration form to the tenant in June, 1984 (prior to the effective 
      date of Section 2528.2[d] of the current Rent Stabilization Code) was 
      adequate service even though it was not delivered to the tenant, but was 


          EJ 410272-RO

      unclaimed or refused. 

      The instructions (Form RR-5 [1-'84]) for rent registration under the 
      Omnibus Housing Act of 1983 contained certain provisions for delivering 
      the apartment registration (Form RR-1 [10-'83]) to a tenant in an 
      envelope.  An owner could:

           "obtain an acceptable proof of delivery in one of the following 
           ways:

                Hand-deliver the envelope to the tenant named, and get an 
                appropriate signed receipt . . . 

                Use the U.S. Post Office "Carrier Route Pre-Sort" service, 
                through a bonded mailing house.  The Post Office will date- 
                certify the number of pieces received from the mailing house 
                for each building, and the bonded mail house will furnish a 
                list of addresses . . .

                Obtain a signed and dated copy of Post Office form #PO 3877 
                "Acceptance of Registered, Insured, C.O.D. and Certified Mail: 
                which is available through your post office and can be used to 
                prove date of delivery of regular first-class mail to the post 
                office . . . 

           The proof(s) of receipt, properly signed and dated (by the tenant, 
           the post office, and the mailing housing, as appropriate), will be 
           considered adequate by DHCR to establish the tenant's 90-day 
           challenge period, which will begin on the date of the receipt. . ."

      (While Post Office form #PO 3877 can be used for certified or registered 
      mail, the Commissioner notes that the form is often used as a 
      certificate of mailing of a number of pieces of mail.  At the upper 
      right hand corner of the form is the statement "[a]ffix stamp here if 
      issued as certificate of mailing or for additional copies of this bill."  
      Indeed, the form #PO 3877 submitted by the owner for the 1986 
      registration shows a fee of 15 cents each for 15 apartments, including 
      the subject apartment, indicating that the form was just being used as 
      a certificate of mailing.  The mention of the form in the RR-5 
      instructions therefore cannot be taken as authorizing certified mail, 
      particularly since the instructions say the form "can be used to prove 
      date of delivery of regular first-class mail to the post office . . ."
      [Emphasis added])

      The Commissioner notes that, by mailing the apartment registration form 
      by certified mail, the owner went beyond what it was required to do 
      since (proven) mailing by unrestricted, regular first-class mail was the 
      designated form of post office delivered mail.  Although mailing by 
      certified mail can give certainty that mail has been received (rather 
      than just the presumption of receipt that mailing by regular first-class 
      mail provides), use of certified mail can also make it more difficult 
      than otherwise for a tenant to receive a mailing, as the letter must 
      either be signed for by someone present when the mail carrier arrives, 
      or a trip must be made to the post office during its business hours so 
      the letter can be signed for.  That may be difficult for some people to 
      arrange.  In addition, if no one is present (whether briefly, or for 
      days or weeks due to such things as vacation or hospitalization) when 
      delivery is attempted and a notice is left, failure of the notice to 







          EJ 410272-RO

      reach the tenant may result in him or her being unaware that there is 
      even a letter to be called for.  Because of this extra, unmandated 
      barrier to the tenant's actual receipt of the letter, the Commissioner 
      is of the opinion that failure to utilize the specified methods of 
      service, coupled with non-receipt by the tenant and the owner's 
      knowledge of the tenant's non-receipt constituted a defective 
      registration.  When the owner, upon becoming aware that its use of the 
      unauthorized and restrictive method of certified mailing had resulted in 
      the tenant not receiving the registration, could easily have fulfilled 
      the registration requirements by delivering a copy of the registration 
      to the tenant in one of the three ways specified in the instructions, 
      the owner did not do so, so the tenant never received the initial 
      registration.  (The owner has not submitted proof of mailing the 1985 
      registration to the tenant, either, so there is no evidence in the 
      record that the tenant was served with any registrations until October, 
      1986).  It does not matter that the service requirements were changed 
      three years later; the owner did not mitigate the impact, of which it 
      was aware, of the unauthorized method that it did use.  It also does not 
      matter that DC-2 forms were to be served by certified mail.  While the 
      owner is correct in stating that a tenant's refusal of a certified 
      letter containing a DC-2 notice does not prevent the mailing from 
      constituting proper service, that is not applicable to the present case, 
      since certified mailing of a DC-2 form is required, and is indeed the 
      only method of service permitted, while in the case of the 1984 
      registration certified mailing was not even one of the three options.  
      The Commissioner notes that Policy Statement 92-3, issued August 14, 
      1992, has memorialized this position by reiterating that for initial 
      registrations filed prior to May 1, 1987, the only acceptable proof of 
      service on the tenant is by one of the three methods mentioned earlier 
      in this order. 

      On July 25, 1990 the DHCR sent a letter to the owner's attorney stating 
      "[a]s requested on July 9, 1990, please submit lease that was in effect 
      on April 1, 1980.  Failure to submit lease or ledger may result in 
      default."  The basis of the Administrator's order was the owner's 
      failure to provide a rental history from April 1, 1980, or to prove 
      (e.g., by the submission of rent ledgers) that the subject apartment was 
      vacant on that date so that the base rent would be the rent charged and 
      paid in the lease commencing April 15, 1980.  It is well settled that an 
      administrative appeal proceeding is not a de novo proceeding, but is 
      limited to the issues and evidence which were before the Administrator.  
      Because the owner failed to submit the requested rent ledgers or other 
      evidence to the Administrator to show that the subject apartment was 
      vacant on April 1, 1980, the affidavits attempting to show the same 
      thing are not accepted for the first time on appeal.  They would be of 
      little probative value in any case, consisting as they do either of 
      retracted affidavits by two people claiming to recall that a particular 
      unit out of 18 stabilized units was vacant for more than two weeks prior 
      to April 15, 1980, ten years before their affidavits, and of hearsay or 
      double hearsay about other people's vague recollections.


      The lease commencing November 1, 1978, submitted by the tenant for the 
      first time in answer to the owner's petition, is also not accepted in 
      this appeal proceeding.  In any event it is not even clear that it would 
      serve to complete the rental history.  That lease was for a rent of 
      $195.00.  If there were no intervening tenancies, a two year vacancy 
      lease commencing April 15, 1980 would result in a rent of $247.65, 


          EJ 410272-RO

      rather than the actual rent of $350.00 pursuant to the April 15, 1980 
      Timbert vacancy lease.  That suggests, that there may have been other 
      new tenancies between November 1, 1978  and April 15, 1980 or that a 
      rent overcharge occurred so that the owner was reluctant to submit this 
      base date lease.  The owner has also questioned the validity of the 
      November 1, 1978 lease in various submissions: "even if the lease 
      recently produced by the tenant which was dated to expire in October of 
      1980 is genuine" [January 9, 1992], and "the prior tenant whose lease 
      was allegedly due to expire in October of 1980" [April 22, 1992]; and is 
      not contending that it should be used in place of the default formula.  
      The Commissioner notes that Bernard Feldman did not sign a rider as 
      guarantor of the lease of Valli Kligerman Timbert until April 23, 1980.  
      This suggest that she may have been required to sign a lease commencing 
      April 15, 1980 [perhaps the day after the last date paid for by the 
      previous tenant], but was not actually given possession until late 
      April, after her guarantor signed.  Based on the foregoing, the owner 
      has clearly failed to meet its obligation of submitting a complete 
      rental history from April 1, 1980.  Accordingly the Rent Administrator 
      correctly established the lawful stabilization rent using established 
      default procedures. 

      On the issue of treble damages, the owner has submitted a copy of a 
      decision wherein the Appellate Division, First Department in Matter of 
      Round Hill Management Co., NYLJ November 12, 1991, p. 25, col. 6, upheld 
      a lower court opinion annulling treble damages imposed where there was 
      a lack of rent records.   However, the reason for the finding of a lack 
      of willfulness [i.e., the fact that the $200.00 rent in effect at the 
      time of purchase was equal to or lower than the rent charged for any 
      other identical apartments in the building gave that owner reason to 
      believe that the rent being charged was not unlawfully high] does not 
      obtain in the present case.  The registered April 1, 1984 rents give a 
      good idea of the rents in the building at the time that the tenant 
      commenced occupancy on November 1, 1983.  The other 13 stabilized three- 
      room apartments had an average rent of $397.65, with 6 of the 13 having 
      rents under $300.00, and with the lowest rent being $193.77.   The 
      complainant had a rent of $568.88, nearly three times the lowest rent.  
      Unlike the situation in Round Hill Management, the complainant's rent 
      was not "equal to or lower than the rent then being charged for all of 
      these ten other identical apartments," and was not "well below the 
      market rate," so the owner could not be said to have "had every reason 
      to suppose, at the time of taking ownership, that the rent then being 
      charged was not in excess of the lawful rent."  The Commissioner 
      considers the Administrator not to have been unwarranted in finding that 
      the owner had not rebutted the presumption of willful overcharge that 
      arose when the owner failed to submit a complete rental history to prove 
      the lawfulness of the rents charged.

      This order may, 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, be filed and enforced in the same manner as a judgment or not 
      in excess of twenty percent per month thereof 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, is $75,594.50 as of September 30, 1990.  The 







          EJ 410272-RO

      lawful stabilization rent is $339.54 per month in the lease from 
      November 1, 1988 to October 31, 1990.



      ISSUED:



                                                                    
                                      JOSEPH A. D'AGOSTA
                                      Acting Deputy Commissioner


    

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