EJ 420173 RO; EJ 420409 RT
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                              JAMAICA, NEW YORK   11433

          APPEALS OF                              DOCKET NO.:  EJ 420173 RO;
                                                               EJ 420409 RT

               I.S.T.A. MANAGEMENT-OWNER
               ELIZABETH NICHOLS-TENANT,          DRO DOCKET NO.: DG 420012 RP



          On October 11, 1990 and  on  October  26,  1990  the  above-named
          petitioners each  filed  a  Petition  for  Administrative  Review
          against an order  issued  on  September  24,  1990  by  the  Rent
          Administrator,  92-31  Union  Hall  Street,  Jamaica,  New   York
          concerning housing accommodations known  as  Apartment  10E,  210
          East 68th Street, New York, New York wherein the Administrator 
          established the Fair Market Rent and directed the owner to refund 
          excess rent.

          These appeals have  been  consolidated  as  they  concern  common
          issues of law and fact.

          The Administrative Appeals are being determined pursuant  to  the
          provisions of Section 2522.3 of the Rent Stabilization Code.

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

          This proceeding was originally commenced when the tenant filed an 
          objection to the initial 1984 apartment  registration.   Pursuant
          to a  Notice  of  Reopening  for  reconsideration,  the  tenant's
          objection was processed as a challenge to the Fair Market Rent.

          Pursuant to Code Section  2522.3(e)  Fair  Market  Rents  may  be
          established on the basis of two criteria:

               (1)  the Maximum Base  Rent  (MBR)  or  the  Maximum
                    Collectible Re t  (MCR)  plus  the  fuel  pass-
                    along,  if  any,  plus  a   special   guideline
                    increase as promulgated by the  New  York  City

          EJ 420173 RO; EJ 420409 RT
               Rent Guidelines Board; and

               (2)    the   rents    generally    prevailing    for
                    substantially  similar  housing  accommodations
                    in   the   same    area    as    the    housing
                    accommodations  involved,  commonly  known   as
                    comparable housing accommodations,  where  such
                    rents are legal regulated rent, for  which  the
                    time to file a Fair Market Rent  Appeal  (FMRA)
                    has expired and no Fair Market Rent  Appeal  is
                    pending, or the Fair  Market  Rent  Appeal  has
                    been finally determined,  charged  pursuant  to
                    a lease  commencing  within  a  4  year  period
                    prior to, or a one year period  subsequent  to,
                    the commencement  date  of  the  initial  lease
                    for   the   housing   accommodation   involved.
                    Where  comparability  data  is  not  submitted,
                    the  Fair  market  Rent  will   be   determined
                    solely on the basis of the first criteria.

          The owner submitted the rents of all the Apartments  in  the  "D"
          and "E" lines but stated that only one, Apartment  2D,  qualified
          as a comparable in accordance with  Section  2522.3.   The  owner
          also submitted proof of new kitchen cabinets and sink in  support
          of a rent increase of $8.38.

          The tenant objected to the use of Apartment 2D  as  a  comparable
          because the first stabilized  tenant,  allegedly,  had  not  been
          served a DC-2 form and therefore,  there  was  no  proof  of  the
          legality of that apartment's rent.   The  tenant  also  requested
          that Apartment 15-E, listed as rent controlled by the  owner,  be
          used as a comparable.

          In the order here under review, the Administrator determined that 
          both Apartment 2D and Apartment  15E  qualified  as  comparables.
          Accordingly, the  Administrator  established  the  initial  legal
          rent, calculated by averaging criterion Number 1  ($596.79)  plus
          criterion Number 2 ($1700 + 617.20 divided by 2 = 1158.60) to get 
          $877.70 + $8.38 improvements = $886.08.

          In the appeal, the owner contends that since there is  a  pending
          challenge  to  the  fair   market   rent   established   by   the
          Administrator for Apartment 15E, that rent should not be used for 
          comparability purposes.  In the alternative, the  owner  contends
          that the rent agreed to by the owner and the tenant of  Apartment
          15E by stipulation should be used in the comparability study.

          In response, the tenant asserts that the Administrator's  use  of
          Apartment  15E  is  correct  because  there  has  been  a   final
          determination of the fair market rent.  The tenant contends  that
          the stipulated rent is consistent with the legal  regulated  rent
          as determined by the Division but that the rent figure sought  to
          be used  by  the  owner  for  comparability  includes  subsequent

          In her own appeal, the tenant contends that the use of  Apartment
          2D for comparability is precluded by the owner's failure to serve 
          a DC-2 Notice on the first stabilized tenant.

          EJ 420173 RO; EJ 420409 RT

          After careful consideration, the Commissioner is of  the  opinion
          that these petitions should be denied.

          A review of the evidence of record confirms  that  Apartment  15E
          meets the criteria established pursuant to Section 2522.3(a)  for
          use in the comparability study.  The initial lease for  Apartment
          15E, an apartment in the same line as  the  apartment  at  issue,
          commenced within a one year period subsequent to the commencement 
          date of the initial lease for the housing accommodations involved 
          herein  and  its  fair  market  rent  appeal  has  been   finally
          determined in a PAR order issued on August 4, 1988  under  Docket
          Number BE 410107 RT, BH 410068 RO and  affirmed  in  court.   The
          stipulation signed by the parties after the  court  decision  did
          not change the fair market rent determination for Apartment  15E.
          Accordingly, the Commissioner finds that  the  Administrator  did
          not err in considering the fair market rent of Apartment 15E  for

          The Commissioner also finds that the Administrator did not err in 
          its use of Apartment 2D for comparability purposes.  Pursuant  to
          Section  2522.3(e)(1)  where  the  rents  of  comparable  housing
          accommodations  are  considered,  such  rents   must   be   legal
          regulated rents for which the time to file  a  fair  market  rent
          appeal has expired  and  no  fair  market  rent  appeal  is  then
          pending,  or  the  fair  market  rent  appeal  has  been  finally
          detemined. Section 2522.3(c) provides that  a  fair  market  rent
          appeal must be filed within 90 days of the mailing of the initial 
          apartment registration.  If the tenant  does  not  challenge  the
          rent within the 90 day period, the  initial  stabilized  rent  is
          the lawful rent and is not subject to challenge.  The  record  in
          this case reveals that the tenant in occupancy  of  apartment  2D
          was served with a copy of the initial apartment registration  but
          did not file a fair market rent appeal.  Therefore,  the  initial
          registered rent of Apartment 2D is the lawful  rent  and  is  not
          subject to challenge.  Accordingly,  the  Commissioner  finds  no
          error  in  the  Administrator's  considering  the  initial  legal
          registered rent of apartment 2D as a comparable rent and  further
          finds that the fair market rent  of  the  subject  apartment  was
          correctly determined.

          The Commissioner notes, however, that although the  Administrator
          correctly calculated the amount of  excess  rent  collected  each
          month, there is an error, either mathematical  or  typographical,
          in the totalling of all excess rent collected.   Accordingly, the 
          Commissioner hereby corrects the error in  the  rent  calculation
          chart.   The  Commissioner  finds  that  $4,667.04  excess   rent
          collected from July 1, 1983 to June 30, 1984 added to the  excess
          rent collected from July 1, 1984 to June 30, 1986,  $9,681.36  is
          equal to $14,348.40.  The total amount  to  be  refunded  to  the
          tenant is $14,348.40 plus $403.84 excess security or $14,752.24.

          Because this determination concerns  lawful  rents  only  through
          June 30, 1986, the owner is cautioned to adjust subsequent  rents
          to an amount no greater than that determined by this  order  plus
          any lawful increases and to register any adjusted rents with this 
          order  and  opinion  being  given  as  the  explanation  for  the

          EJ 420173 RO; EJ 420409 RT
          The owner is directed to refund or fully  credit  against  future
          rents over a period not exceeding six months  from  the  date  of
          receipt of this order, any rent paid by the tenant in  excess  of
          the lawful stabilization rent.

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

          ORDERED, that these petitions be, and the same hereby are denied, 
          and the Rent Administrator's order be, and the  same  hereby  is,
          modified in accordance with this Order and Opinion.


                                                  JOSEPH A. D'AGOSTA
                                                  Acting Deputy Commissioner


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