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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
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IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. EL 410286 RO
: DRO DOCKET NO.ZCA 410320R
TENANT: SLAVA RADANOVIC
LUBA ROBINS
PETITIONER :
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW IN
PART
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
appeals.
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
mailing.
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
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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
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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
adjustment.
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.
ISSUED
ELLIOT SANDER
Deputy Commissioner
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