EL 410286 RO

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

          APPEAL OF                              DOCKET NO. EL 410286 RO
                                              :  DRO DOCKET NO.ZCA 410320R
                                                 TENANT: SLAVA RADANOVIC
               LUBA ROBINS
                                PETITIONER    : 


               On December 21, 1990, the above-named petitioner-owner  filed
          a Petition for Administrative Review against an  order  issued  on
          November  16,  1990,  by  the  Rent  Administrator,  Gertz  Plaza,
          Queens, New York, concerning the housing accommodations known as 7 
          East 75th Street, New York, New York, Apartment  No.  4B,  wherein
          the Rent Administrator determined the fair market rent pursuant to 
          the special fair market rent guideline promulgated by the New York 
          City Rent Guidelines Board for use in calculating fair market rent 

               The Administrative Appeal is 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 warranted.

               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 in January 1988,  by
          the tenant's filing of a complaint in  which  she  questioned  the
          fair market rent of the subject apartment,  and  stated  that  she
          first moved to the subject apartment on  December  1,  1987  at  a
          rental of $1100 per month.

               In answer to the tenant's  complaint,  the  owner  cited  the
          subject line of apartments, cited the "A" line of  apartments  and
          stated that apartments 1A and 4A in the subject premises should be 
          considered comparable apartments.  The owner submitted  copies  of
          leases and rent records showing that apartment 1A was leased  from
          March 1, 1987 to February 29, 1988 at a rental of $1100 per  month
          and that  apartment  4A  was  leased  as  a  non  rent  stabilized
          apartment from August 1, 1986 to July 31,  1988  at  a  rental  of
          $1000 per month.  The owner also  submitted  a  copy  of  a  court
          stipulation  to  the  effect  that  the  tenant  of  apartment  4A
          acknowledged that such apartment was not his primary residence and 

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          that he agreed to pay a rent of $1000 per month pursuant to a  two
          year lease commencing August 1, 1986.  

               On October 15, 1990, the owner was advised that in  order  to
          consider apartment 1A in a comparability study, the owner  had  to
          submit proof of service of the RR-1 Notice and DC-2 Notice on  the
          first rent stabilized tenant.  In response to the October 15, 1990 
          notice, the owner submitted copies of the RR-1 Notice and the DC-2 
          Notice and an affirmation that said notices were served  upon  the
          first rent stabilized tenants on September 6, 1985.

               In Order Number ZCA 410320R, the Rent Administrator  adjusted
          the initial legal regulated rent by  establishing  a  fair  market
          rent of $635.86 effective December 1, 1987, the commencement  date
          of the initial rent stabilized lease.  The fair  market  rent  was
          determined solely on the basis of the  special  fair  market  rent
          guideline - $619.66 - plus  a  rent  increase  of  $16.20  due  to
          improvements made in the subject apartment.  In said order it  was
          stated that the owner failed to provide adequate proof of  service
          of the DC-2 Notice and RR-1 Notice so that apartment 1A could  not
          be used as a comparable apartment  and  that  no  other  apartment
          cited by the owner met the criteria to be  used  as  a  comparable
          apartment.  In addition in said order, it was determine  that  the
          tenant had paid  excess  rent  of  $17,505.07,   including  excess
          security, through November 30, 1990, and the owner was directed to 
          refund the excess rent to the tenant.

               In this  petition,  the  owner  contends  in  substance  that
          Apartment 1A should have been considered  a  comparable  apartment
          since the owner submitted an affirmation of service  of  the  DC-2
          Notice and RR-1 Notice, that Apartment 4A  is  comparable  to  the
          subject apartment although as stated in the proceeding  below  the
          subject apartment is superior in that it  has  a  fireplace,  that
          the  Rent  Administrator  failed  to   take   into   account   the
          independent broker's evaluation of the subject apartment submitted 
          below and that the first rent charged to  the  complaining  tenant
          did not exceed the fair market value.

               In order to clarify matters for the parties,  on  October  7,
          1991, the owner's attorney was sent a letter affording it a chance 
          to submit adequate proof that a DC-2  Notice  and  /  or  an  RR-1
          Notice  was  served  on  the  first  rent  stabilized  tenant   of
          Apartment 1A.  For the DC-2 Notice, proof of certified mailing was 
          requested.  For the RR-1 Notice, proof of  one  of  the  following
          three methods was required.  1)  Signed  receipt  from  tenant  of
          Apartment 1A that he received the apartment registration form  and
          the date of said receipt; 2) U.S. Post Office "Carrier Rou e  Pre-
          Sort"   certification   arranged   through   Rent    Stabilization
          Association or directly through a bonded mailing house; 3)  Signed
          and dated copy of Post  Office  form  #P.O.  3877  "Acceptance  of
          Registered, Insured, C.O.D. and Certified Mail". The owner did not 
          submit a timely response to this notice.

               The Commissioner is of the opinion that this petition  should

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          be granted in part.

               Pursuant to Section 2522.3 (e) of the Rent Stabilization Code 
          effective May 1, 1987, applicable  to  fair  market  rent  appeals
          filed after April 1, 1984, comparability will be determined  based
          on the following:

          (1) 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  Appeal  has  been   finally
          determined, charged pursuant to a lease commencing within  a  four
          year period prior to, or a one  year  period  subsequent  to,  the
          commencement  date  of  the  initial   lease   for   the   housing
          accommodation involved; and

          (2) At the owner's  option,  market  rents  in  effect  for  other
          comparable housing accommodations on the date of the initial lease 
          for the housing accommodation involved.

               Pursuant to Sections 2522.3 (c) (2), 2526.1 (a) (2) (ii), and 
          2428,2 (d) of the Rent Stabilization Code, a tenant  must  file  a
          challenge  to  the  initial  apartment  registration   (overcharge
          complaint or fair market rent appeal) within 90 days of service of 
          the registration form ( hereafter RR-1 Notice) on  the  tenant  by
          certified mail.  Section 2528.2 (d) further provides that for 
          RR-1 Notices served prior to the effective date of  that  section,
          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

               The Division's instructions for service of the RR-1 Notice on 
          the tenant by the owner provided for hand delivery of the envelope 
          with signed receipt, use of the Post Offi e  "Carrier  Route  Pre-
          Sort" Service through a bonded mailing house as evidenced  by  the
          Post Office date-certification of the number  of  pieces  received
          from the mailing house for each building  and  the  mailing  house
          addressee list or regular first  class  mail  documented  by  Post
          Office form #P.O. 3877.

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

               The Division's instructions for  service  of  the  Notice  of
          Initial Legal Registered Rent (hereafter DC-2 Notice) provide that 
          service must be by certified mail.

               In the instant case pursuant to the  aforementioned  sections
          of the Code and Division policy, the owner had to establish 

          service of the RR-1 Notice or the DC-2 Notice on  the  first  rent
          stabilized tenant of Apartment 1A by the methods enunciated  above
          in order to be able to use Apartment 1A as a comparable  apartment
          in determining the fair market rent of the subject apartment since 
          Apartment 1A is a rent stabilized apartment.  It is noted that the 

          EL 410286 RO
          owner did not submit  the  required  proof  although  specifically
          directed to do so on the appeal level.  An affirmation by  one  of
          the co-owners that service of the RR-1 Notice and DC-2 Notice  was
          made is not an adequate  substitute  for  the  proofs  of  service
          required by the Division.   Accordingly,  the  Rent  Administrator
          correctly did not use Apartment 1A as a comparable apartment.

               However, Apartment 4A which was destabilized  pursuant  to  a
          court stipulation on the basis of non primary residence  effective
          August 1,  1986  should  have  been  considered  as  a  comparable
          apartment.  Apartment 4A was first rented as a  destabilized  unit
          due to non primary residence on August 1, 1986 pursuant to  a  two
          year lease at a rental of $1000 per month.  This  apartment  meets
          the requirements of Section 2522.3 (e) (2) in that it had a market 
          rent in effect on the date of the initial lease  for  the  subject
          apartment herein (date of initial lease  of  subject  apartment  -
          December 1, 1987) and is the same size as the subject apartment.

               Therefore the initial legal regulated  rent  of  the  subject
          apartment and  amount  of  excess  rent  paid  by  the  tenant  is
          determined as follows:  The averaging of the fair market  rent  of
          $619.66 based on the special guideline with the comparable rent of 
          Apartment 4A of $1000 - that is $619.66 plus $1000 divided by 2  -
          which results in a fair market rent of $809.83 plus  $16.20  based
          on improvements which equals a final fair market rent  or  initial
          legal regulated  rent  of  $826.03  for  the  tenant  herein  from
          December  1,  1987  to  November  30,  1989.   The  initial  legal
          regulated rent is then increased to $871.46 effective December  1,
          1989 to November 30, 1990 pursuant to a Guideline 21 increase of 5 
          1/2% upon lease renewal.  Since the  tenant  actually  paid  $1100
          from December 1, 1987 to  November  30,  1989  and  $1160.50  from
          December 1, 1989 to November 30, 1990, the total amount of  excess
          rent owed by the owner to the tenant including excess security  is
          $10,332.80 from December 1, 1987 to November 30, 1990.

               With regard to the owner's  contentions  that  an  additional
          allowance  should  be  made  based  on  an  independent   broker's
          evaluation of the subject apartment and the fact that the  subject
          apartment  contains  a  fireplace,  the  Commissioner  is  of  the
          opinion that such factors do not warrant any additional  increases
          in the lawful stabilization rent of the  subject  apartment.   The
          owner has not established that the fireplace was  installed  after
          the last rent cotrolled tenant moved out.  Accordingly, this  item
          is considered to be included in  the  maximum  base  rent  of  the
          subject apartment which was used to determine the fair market rent 
          of the subject apartment pursuant to the special fair market  rent
          guideline.  In addition, an  allowance  for  such  item  canot  be
          added to the comparable rent of apartment  4A  since  the  formula

          allowing the use of comparable rents in determining a fair  market
          rent provides for  the  use  of  the  actual  rent  charged  in  a
          comparable apartment and not for the use of a comparable rent plus 
          additional allowances.

               The owner is directed to roll back the  rent  to  the  lawful
          stabilized rents consistent with this decision and  to  refund  or

          EL 410286 RO
          fully credit against future rents over a period not exceeding  six
          months from the date of receipt of this order, the excess rent 
          collected by the owner.

               In the event the owner does not take  appropriate  action  to
          comply within sixty (60) days from the date  of  this  order,  the
          tenant may credit the excess rent collected by the  owner  against
          the next month(s) rent until fully offset.
               Because this determination concerns lawful rents only through 
          November 30, 1990, 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

               If  the  owner   has   already   complied   with   the   Rent
          Administrator's order and there are arrears due to the owner as  a
          result of the instant determination, the tenant shall be permitted 
          to pay off the arrears in twenty four equal monthly  installments.
          Should the tenant vacate after the issuance of this order or  have
          already vacated, said arrears shall be payable immediately.

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

               ORDERED, that this petition for administrative review be, and 
          the same hereby is, granted in part, and, that the  order  of  the
          Rent Administrator be, and the same hereby  is,  modified  to  the
          extent hereinabove indicated.  The total  amount  of  excess  rent
          owed  to  the  tenant  is  $10,332.80,  and  the  monthly   lawful
          stabilization rents are $826.03 effective  December  1,  1987  and
          $871.46 effective December 1, 1989.


                                          ELLIOT SANDER
                                          Deputy Commissioner


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