EG520245RT
                             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.: EG520245RT

           Idia Velez,                       DRO DOCKET NO.: BI410117R
                                                          
                               PETITIONER    
      ------------------------------------X                             

          ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW


      On July 3, 1990, the above-named petitioner-tenant filed a Petition for 
      Administrative Review against an order issued on June 9, 1990, by the 
      Rent Administrator concerning the housing accommodations known as 815 
      West 180th Street, New York, New York, Apartment No. 44, wherein the 
      Administrator determined that tenant had not been overcharged.

      The Administrative Appeal is being determined pursuant to the provisions 
      of Section 2526.1 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 commenced by the tenant's filing of a rent 
      overcharge complaint on October 10, 1987.  The tenant had commenced 
      occupancy of the subject apartment on September 1, 1977 pursuant to a 
      two year lease at a rent of $180.00 per month.

      In answer to the tenant's complaint the owner submitted a lease history 
      dating from September, 1984.  

      In response to further inquiries on the rent charged after the issuance 
      of a DHCR rent reduction order for service violations, the owner 
      submitted a copy of the tenant's billing history up to April 12, 1990, 
      showing a current rent charged of $280.83, and a base rent of $312.23. 
      The owner also stated that he had not increased the rent after the DHCR 
      approved an MCI increase, AL530264-OM, because the rent reduction order 
      was in effect.

      In order Number BI410117R, the Rent Administrator determined that the 
      tenant had not been overcharged through June 30, 1990 and that the 
      overcharge complaint was denied.

      In this petition, the tenant contends in substance that the order should 
      not have granted the MCI increase to the owner because the tenant's 
      lease made no mention of such an increase, and therefore the owner's 
      attempt to collect it is illegal.  Furthermore, the tenant feels that 
      the owner's letter of June 24, 1990 was unfair in demanding immediate 







      EG520245RT


      payment of the entire increase since the effective date of September 1, 
      1989, because it was the owner's fault that the tenant was not notified 
      of the increase at that time.

      The owner responds that the tenant was not notified of the MCI increase 
      when it was approved because the DHCR rent-reduction order was still in 
      effect at that time and the owner was prohibited from collecting the 
      increase.  However, the owner states that the DHCR shortly thereafter 
      issued an order restoring the rent, and that the owner was then able to 
      charge the increase back to the effective date.  The owner also disputes 
      the claim that the increase was not mentioned in the lease and 
      highlights language in the renewal lease that generally provides for a 
      rent increase or decrease pursuant to DHCR orders.

      The Commissioner is of the opinion that the tenant's petition should be 
      granted.

      Pursuant to Section 2523.4(a) of the Rent Stabilization Code:

           A tenant may apply to the DHCR for a reduction
           of the legal regulated rent to the level in ef-
           fect prior to the most recent guidelines adjust-
           ment, and the DHCR shall so reduce the rent for 
           the period for which it is found that the owner
           has failed to maintain required services.  The
           order reducing the rent shall further bar the 
           owner from applying for or collecting any further
           increases in rent until such services are restored.

      The record in this case establishes that the Rent Administrator 
      improperly included an MCI increase that had been approved in DHCR order 
      AL530264-OM, effective September 1, 1989, even though a rent reduction 
      order for service violations, BD510311S, was in effect on that date.  
      This action was prohibited under Section 2523.4(a) of the Rent 
      Stabilization Code, as stated above.  

      However, the owner's rent records indicate that an overcharge occurred 
      not because the owner collected the MCI increase - which he did not - 
      but because the owner incorrectly collected a guidelines increase in the 
      two year lease term commencing on September 1, 1988, in spite of the 
      ongoing rent reduction order.  The owner had complied with the order to 
      the extent of reducing the rent by a guideline increase, and he 
      continued the reduction throughout the period here under review.  
      However, the owner's disregard of the rule barring the collection of 
      further guidelines increases until services are restored - as cited 
      above - resulted in overcharges in the amount of $708.32, including 
      interest, as documented in the enclosed rent calculations chart affixed 
      hereto and made a part hereof.

      The Commissioner has determined that the record does not support a 
      finding of willfulness.  It is reasonable to infer from the owner's 
      prompt reduction of the rent and credit for retroactive overcharges in 
      compliance with the service reduction order, that the improper 
      guidelines increase was unintentional.  It is also apparent that the 
      owner was not sent the required treble damages.  Therefore, only the 
      interest penalty will be imposed.



      EG520245RT


      Finally, it should be mentioned that a letter from the Compliance 
      Bureau, dated July 31, 1990, indicates that the owner has made all 
      repairs mentioned in the reduction order.  The rent remains frozen, 
      however, until the owner files a rent restoration application within the 
      DHCR.

      The owner is directed to reflect the findings and determinations made in 
      this order on all future registration statements, including those for 
      the current year if not already filed, citing this order as the basis 
      for the change.  Registration statements already on file, however, 
      should not be amended to reflect the findings and determinations made in 
      this order.  The owner is further directed to adjust subsequent rents to 
      an amount no greater than that determined by this order plus any lawful 
      increases.

      The Commissioner has determined in this Order and Opinion that the owner 
      collected overcharges of $708.32.  Upon expiration of the period for 
      seeking review of this Order and Opinion pursuant to Article Seventy- 
      eight of the Civil Practice Law and Rules, not in excess of twenty 
      percent per month of the overcharge may be offset by the tenant against 
      any rent thereafter due the owner.  In crediting this overcharge, the 
      tenant may add to the overcharge, interest at the rate payable on a 
      judgment pursuant to section 5004 of the Civil Practice Law and Rules 
      from the issuance date of the Rent Administrator's order to the issuance 
      date of the Commissioner's order.

      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, and that the order of the Rent Administrator be, and 
      the same hereby is, modified in accordance with this Order and Opinion.



      ISSUED:



                                                                  
                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner





    

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