EK 510052 RT
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                              JAMAICA, NEW YORK   11433

          ----------------------------------X     S.J.R. 6355
          APPEAL OF                               DOCKET NO.:  EK 510052 RT

                      MICHELLE MEADE
                           AND                    DRO DOCKET NO.: ZAL-510558-R
                    MICHAEL MITCHELL,
                                                  OWNER:  MANOR MANAGEMENT


          On November 2, 1990, the above-named petitioner-tenants filed an 
          Administrative Appeal against an order issued on October 4, 1990 by 
          the Rent Administrator, 92-31 Union Hall Street, Jamaica, New York, 
          concerning the housing accommodation known as 37-49 Payson Avenue, 
          New York, New York, Apartment 4F, wherein the  Administrator 
          determined that the tenants had been overcharged and directed the 
          owner to refund an overcharge of $8,546.58 including interest on 
          the overcharge minus the amount of $8,438.65 already refunded to 
          the tenants.

          Subsequent thereto, the petitioners filed a petition in the Supreme 
          Court pursuant to Article 78 of the Civil Practice Law and Rules 
          requesting that the "deemed denial" of the administrative appeal be 

          On May 29, 1992, pursuant to an agreement between the parties the 
          petition was withdrawn by order of Justice Joan B. Lobis.

          The Administrative Appeal is being determined pursuant to Section 
          2526.1 of the Rent Stabilization Code.

          The issue herein is whether the Rent Administrator imposed the 
          correct penalty.

          A review of the record indicates that on December 22, 1986 the 
          tenant filed a complaint of rent overcharge which was served on the 
          former owners Akam Associates, on January 30, 1987; that the 
          subject property was purchased by the current owner on October 5, 
          1988; that the first official notice of the proceeding the current 
          owner received was a Final Notice dated March 30, 1989; that the 

          EK 510052 RT

          current owner tendered a refund of $8,438.65 to the tenants on 
          April 13, 1989 which the tenants accepted; and that the tenant's 
          complaint was not served on the current owner until April 14, 1989.  
          The record further reveals that the tenants moved from the subject 
          apartment in June 1989.

          In the appeal the tenants contend that because the overcharge was 
          willful, the Administrator should have awarded treble damages and 
          legal fees.

          The current owner contends that the evidence substantiates its 
          assertion that the overcharge was not willful and that it has met 
          its burden of proof in establishing the lack of willfulness by 
          voluntarily refunding the full overcharge within the allotted time 
          as specified in the Division of Housing and Community Renewal's 
          (DHCR's) policy statement 89-2.

          The Commissioner is of the opinion that this petition should be 

          Pursuant to Section 2526.1(a)(1) of the Rent Stabilization Code, 
          treble damages are assessed where an overcharge is "Willful."  The 
          Code creates a presumption of willfulness subject to rebuttal by 
          the owner showing non-willfulness of the overcharge by a 
          preponderance of the evidence.  When an owner is notified that an 
          overcharge has been determined and treble damages are about to be 
          imposed, it has twenty days within which to submit evidence to 
          prove that the overcharge was not willful.  It is the policy of the 
          DHCR that the burden of proof in establishing lack of willfulness 
          shall be deemed to have been met and therefore, the treble damages 
          penalty is not applicable where it is apparent or where it is 
          demonstrated that an overcharge occurred under certain specified 
          circumstances, such as is present in the instant proceeding, where 
          an owner adjusts the rent on his or her own within the time 
          afforded to interpose an answer to the proceeding and submits proof 
          to the DHCR that it has tendered, in good faith, to the tenant a 
          full refund of all excess rent collected, plus interest.  See 
          Policy Statement 89-2.  The record reveals that the instant owner 
          tendered a full refund within the appropriate time frame including 
          interest but that the correct amount of interest was not included.  
          In this case the Commissioner is of the opinion that the 
          Administrator correctly imposed an interest penalty rather than 
          treble damages.

          The Commissioner notes that pursuant to Code Section 2526.1(d), the 
          assessment of attorney's fees are discretionary.  The Commissioner 
          finds no abuse of discretion on the part of the Administrator in 
          failing to assess attorney's fees.

          Because this determination concerns lawful rents through May 1, 
          1987, the owner is cautioned to adjust subsequent rents to an 
          amount no greater than that determined by the Rent Administrator's 

          EK 510052 RT

          order plus any lawful increase, and to register any adjusted rents 
          with this order and opinion being given as the explanation for the 
          adjustment.  The lawful stabilization rent is $317.02 as of May 1, 
          1989.  A copy of this order is being sent to the tenant currently 
          in occupancy of the subject apartment.

          THEREFORE, in accordance with the provisions of 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, 


                                                  JOSEPH A. D'AGOSTA
                                                  Acting Deputy Commissioner


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