Docket No. EG910164RO


                                 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   S.J.R. No.: 7508
          IN THE MATTER OF THE ADMINISTRATIVE     ADMINISTRATIVE REVIEW
          APPEAL OF                               DOCKET NO.: EG910164RO

                                                  DISTRICT RENT
                                                  ADMINISTRATOR'S DOCKET
          Harish Pal                              NO.: SDG-9-1-0003-R
                                                  TENANTS: Mr. and Mrs. 
                                                           William Minns   
                                   PETITIONER
          ------------------------------------X


            ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW



          On July 13, 1990, the above named petitioner-owner filed a Petition 
          for Administrative Review against an order issued on June 14, 1990, 
          by the Rent Administrator, 55 Church Street, White Plains, New York 
          concerning housing accommodations known as Apartment 6B, 20 Fair 
          View Avenue, Spring Valley, New York, wherein the Rent 
          Administrator determined that the owner had overcharged the tenant 
          $5,995.47 and directed a refund of $17,986.41 including treble 
          damages.  In addition, the Administrator directed the owner to 
          refund any security deposit in excess of one month's rent, but no 
          dollar amount was specified regarding the excess security.  The 
          tenants herein have filed an Article 78 proceeding in the nature of 
          Mandamus.  That proceeding is pending in Supreme Court, Rockland 
          County, Index Number 3088/94, Justice Meehan.

          The issues in this appeal are whether the owner overcharged the 
          tenant and, if so, whether the overcharge was either willful or due 
          to the negligence of the owner.  

          The applicable sections of the Emergency Tenant Protection Act of 
          1974 (ETPA) are Sections 8623 and 8632.

          The Commissioner has reviewed all of the evidence in the record and 
          has carefully considered that portion of the record relevant to the 
          issues raised by the administrative appeal.

          The tenants commenced this proceeding on June 16, 1989 by filing an 
          overcharge complaint, stating their initial rent of $700.00 for a 
          one year vacancy lease was an overcharge because the prior tenant 












          Docket No. EG910164RO

          had been paying $512.56.  A copy of a check for that amount dated 
          August 8, 1987 and made out to the owner was submitted with the 
          complaint.  They also alleged a security deposit of $1000.00, i.e., 
          of $300.00 more than their initial rent, and a copy of a money 
          order for $1000.00 payable to the owner was also submitted.

          On July 11, 1989 the owner was requested to submit the present 
          tenants' leases, the last lease of the prior tenant, and the lease 
          of the comparable apartment on which the vacancy factor had been 
          determined.

          In answer to the complaint, the owner stated that the rent had been 
          clearly stated to the tenants ten times before the rental and they 
          did not complain about it then or at the time of their renewal.  He 
          noted that their complaint was filed one and a half years after 
          they moved in.  He also alleged the market value of their two 
          bedroom apartment was $800.00; his tax burden had been greatly 
          increased by the municipality; and that the building could not be 
          maintained even at the rents actually being charged.  He alleged, 
          without proof, that the prior tenant had been paying $650.00, 
          rather than was the $512.56 alleged by the tenants.  Regarding the 
          excess security deposit, the owner stated "they can move out from 
          there and we will give them their security back."

          In a subsequent further response the owner alleged he bought the 
          building in 1987, paying market value, and was not informed by the 
          prior owner about Guidelines and other restrictions on rent.  The 
          building had not been registered by the prior owner but was 
          registered by the petitioner in 1988.  The owner contended that the 
          law of supply and demand should play a role in setting rent and 
          that the "same apartment is going for $1000.00 per month in the 
          same neighborhood."  The owner contended that as a free citizen he 
          also has rights and that the tenants were not forced to take the 
          apartment at the rent offered.  The owner alleged without proof 
          that the prior tenant "must [have been] paying the balance [between 
          $650.00 and $512.56] by cash."  The owner asked how the rent on a 
          two bedroom apartment could possibly be $512.56 when the rent for 
          one bedroom apartments were between $600.00 and $625.00 and $512.56 
          did not even cover the costs of taxes, heat, water, electricity and 
          maintenance.  The owner further asked why only Spring Valley was 
          Rent Stabilized in Rockland County, when there are no differences 
          in taxes, utilities, or maintenance.

          Subsequently the owner submitted copies of the initial registration 
          and subsequent registrations of the apartment, all dated August 15, 
          1988.  These documents alleged that the prior tenant whose $512.56 
          check had been submitted by the tenant-complainants had paid 
          $545.65 on April 1, 1984, $562.00 on April 1, 1985, $578.85 on 
          April 1, 1986, $596.20 on April 1, 1987, all leases being for one 
          year from November 15 to November 14.  The owner also submitted a 
          second registration for 1987 showing a different prior tenant whose 
          lease commenced April 1, 1987 at $660.00 (sic) for a 13 month 






          Docket No. EG910164RO

          lease.  (Although the complainants' lease and that of the prior 
          tenant show the street address to the "20", all the registrations 
          bear the address "24."   No explanation for the August 1987 rent 
          check (five months after the commencement of the vacancy lease of 
          the alleged intermediate tenant) from the November 15, 1986- 
          November 14, 1987 tenant is given.

          On December 13, 1989 the Administrator requested the owner to 
          document the rental history stated in the registrations and, in 
          particular, to explain the discrepancy between the second 
          registration for 1987 and the August, 1987 check submitted by the 
          complainants.

          In a response dated January 17, 1990 the owner justified certain 
          rent increases by certain alleged expenses.  However, the paid 
          bills and cancelled checks which had been requested by the 
          Administrator were not submitted.  The owner alleged that the prior 
          tenant whose check been submitted by the complainants broke her 
          lease and the intermediate tenant of the second 1987 registration 
          then rented the apartment.  However, no specific response regarding 
          the August, 1987 check for $512.56 was given.

          On February 22, 1990 the Administrator requested copies of the 
          present tenants leases, the prior tenant's last lease, and the 
          lease for the comparable apartment that had been used to determine 
          the vacancy factor.

          In a response dated March 20, 1990 the owner stated there were four 
          or five two bedroom apartments with rent between $700.00 and 
          $768.50 and submitted copies of leases as follows: 7/1/89-6/30/90 
          for $717.50, 7/1/88-6/30/89 for $700.00, both for apartment 1D; 
          7/1/89-6/30/90 for $750.00, for apartment 6A; 4/1/88-3/31/89 for 
          $750.00, for apartment 8A without tenant's signature; 4/1/89- 
          3/31/90 for $768.75 for Apartment 8A, tenant's signature, if any, 
          cut off by photocopying.  He also submitted a purported copy of the 
          April 1, 1987-March 31, 1988 lease for $660.00 with the tenant that 
          he alleges succeded the prior tenant whose August 1987 rent check 
          was submitted by the complainants.  However the $660.00 lease is 
          not signed by the tenant.  Instead, the tenant's name is merely 
          printed in capital letters in the place for the tenant's signature.  
          The printing appears to be the same as on the face of the lease and 
          on the registration, i.e., appears to be by the owner.  A purported 
          copy of the first page of final lease of the other prior tenant 
          (November 15, 1986-November 14, 1987, at $596.20) was submitted, 
          i.e., the signature page was missing.

          On March 29, 1990 the Administrator again requested "a copy of the 
          comparable lease on which the vacancy factor was determined for the 
          subject apartment," returning the five "comparable leases" 
          described above.

          On April 10, 1990 the owner submitted a copy of a 4/1/87-3/31/88 












          Docket No. EG910164RO

          lease for $730.00 and a copy of a 4/1/88-3/31/89 lease for $750.00, 
          both for apartment 8A.  Neither lease included the second, i.e., 
          the signature, page.  (On the copy of the signature page submitted 
          on March 20, 1990, i.e., the $750.00 lease, the tenant's signature 
          did not appear.  Instead the tenant's name was printed in all 
          capital letters as on the face of the lease, i.e., apparently by 
          the owner.)

          In the order herein under review, the Administrator held that since 
          the apartment had not been registered until August 15, 1988, the 
          rent should be frozen at the August 1, 1984 rate pursuant to 
          Section 123 (now 2509.3) of the Regulations.  However, since the 
          owner had been unable to explain the discrepancy between the April 
          1, 1984 registered rent of $545.65 and the August 1987 rent check 
          for the same tenant for $512.56, the Administrator used the latter 
          rent as the rent up until August 31, 1988, i.e., to compute the 
          overcharge from October 4, 1987 though August 31, 1988.

          The Administrator held that since the owner had registered in 
          August of 1988, the rent could be increased as of September 1, 
          1988.  However, because of the owner's failure to submit a signed 
          copy of the comparable lease used to determine the vacancy factor 
          for the complainants' initial October 1987 lease, the Administrator 
          disallowed any vacancy factor for that lease.  (The vacancy 
          increase for the Guidelines period October 1, 1987 though September 
          30, 1988 was the lesser of 5 % of the prior rent or the difference 
          between the prior rent and the highest rent of a comparable 
          apartment in the building or complex.)  Accordingly, the 
          Administrator allowed only a Guidelines increase over $512.56, 
          i.e., 2.5% over $512.56, or $525.37 (9/1/88-10/4/88) and an 
          additional 2.5% increase, or $538.50, for the (10/5/88-10/4/89) 
          lease.  Because the owner had not offered the tenants a renewal 
          lease subsequent to their 88-89 lease, the rent was held at $538.50 
          through the computation date (6/30/90), resulting is a total 
          overcharge of $5,995.47 (exclusive of excess security) for October 
          5, 1987 though June 30, 1990.

          The Administrator stated that the law requires treble damages 
          unless the owner submits satisfactory evidence that the overcharge 
          was not a willful act. (Actually the law requires treble damages 
          under ETPA even if the overcharge was the result of the owner's 
          negligence).  Therefore, "[b]ased upon the landlord's failure to 
          submit signed copies of the comparable [lease] and [the] prior 
          tenant's lease [or] proof that the prior tenant paid rent by a 
          combination of check and cash, as claimed," the Administration 
          imposed treble damages, ordering the owner to refund $5,995.47X3, 
          or $17,986.41, plus any excess security. 

          In this petition the owner contends the Administrator's order is 
          incorrect and should be modified because the Administrator failed 
          to consider all the proof that had been submitted and because of 
          the alleged delay by the Administrator in reaching a decision, 






          Docket No. EG910164RO

          thereby increasing the size of the overcharge.  Furthermore, the 
          owner contends the Administrator erred in imposing treble damages.

          More specifically, the owner alleges that the Administrator should 
          have computed the complainants' lawful rent by starting with the 
          alleged prior rent of $650.00 (sic) and adding the vacancy factor 
          plus Guidelines increases.  ( Although the purported lease and the 
          registered rent of the alleged intermediate tenant are for $660.00, 
          the owner consistently alleges a prior rent of $650.00.)

          The owner, in substance, repeats his allegations before the 
          Administrator that the tenants were fully informed and agreed to 
          pay the rent, the rent was below market value, the owner paid 
          market value for the building, his costs are the same as non-ETPA 
          owners, the law of supply and demand should be considered, the ETPA 
          rents are insufficient to properly maintain the building.  

          The owner further contends that he had submitted all leases for the 
          comparable apartments and all requested leases for the subject 
          apartment.  He resubmits most of these on appeal.  He alleges that 
          "[y]our department never told me of any more documents [that were 
          needed] or [that] any of the leases were incorrect, otherwise I 
          would have mailed everything you need."  Nevertheless, the owner 
          does not submit signed copies on appeal of either the alleged 
          comparable lease or the leases of the prior tenants.  (The owner 
          alleges that signed copies of comparable lease(s) had been 
          submitted to the Administrator.)  In addition he alleges that a new 
          stove and refrigerator were provided at unspecified dates and costs 
          but the owner received no allowance for same from the Division.

          In answer to the petition the tenants contend the Administrator's 
          order was correct and should be affirmed, repeating, in substance, 
          their arguments before the Administrator.

          The Commissioner is of the opinion that this petition should be 
          denied.

          At the outset the Commissioner notes that the Administrator's 
          alleged delay in processing the complaint is irrelevant, especially 
          in this proceeding where much of the time consumed in processing 
          the complaint was the result of the owner's repeated failure to 
          comply properly with requests for documentation.
          Regarding the owner's economic arguments, e.g., the law of supply 
          and demand, market value, the high cost of owning and maintaining 
          the subject premises, etc., the Commissioner notes that in passing 
          ETPA the Legislature found that a housing emergency existed based 
          in part on "excessive and unwarranted rents and rent increases" and 
          "that the transition from regulation to a normal market of free 
          bargaining between landlord and tenant, while the ultimate 
          objective of state policy must take place with due regard for such 
          emergency."  Section 8622 in McKinneys Consolidated Laws, Book 65.  
          The DHCR is mandated to enforce ETPA uniformly throughout its 












          Docket No. EG910164RO

          jurisdiction.  Pursuant to Section 8623, only those municipalities 
          in Rockland County whose local legislative bodies declare a local 
          emergency are covered by ETPA.  Spring Valley is one of those 
          municipalities.  Accordingly, the petitioner, like all other owners 
          of property covered by ETPA, was and is obligated to conform to the 
          requirements of the law.

          ETPA provides a mechanism for an owner to apply to the DHCR for a 
          so-called hardship increase if he or she can establish the 
          necessity for such increase.  See Section 8626.d.  However, an 
          owner who unilaterally charges more than the lawful stabilized rent 
          is subject to a finding of overcharge.  Furthermore, treble damages 
          are mandatory unless the owner can demonstrate by a preponderance 
          of the evidence that the overcharge was neither willful nor due to 
          the negligence of the owner.  Section 8632.

          Based on the foregoing, the only issues before the Administrator 
          and now before the Commissioner are: did the owner charge more than 
          the lawful rent and, if so, were treble damages warranted?  Based 
          on the record as a whole, it is clear that the answer to both 
          questions is "yes."

          Had the apartment been properly registered, under the Guidelines 
          order in effect at the commencement of the complainants' initial 
          lease, the owner was allowed to raise the prior lawful rent by 5% 
          or to the level of the highest rent for a comparable apartment in 
          the building or complex, whichever is lowest.  The tenant submitted 
          a copy of a rent check dated August 8, 1987 from the prior tenant 
          whose last lease was from November 15, 1986 to November 14, 1987.  
          This prior tenant will be referred to hereinafter as prior tenant 
          A.  The owner did not dispute that the submitted check was a timely 
          rent check from prior tenant A, but alleged that the prior tenant 
          had been paying $650.00 per month and that the difference between 
          the check amount and the actual rent "must" have been paid in cash.  
          The owner did not then allege that the $650.00 had been paid by a 
          subsequent prior tenant.  Although asked to prove the difference 
          had been paid in cash, the owner did not do so.

          Moreover, the lease for prior tenant A submitted by the owner 
          showed a rent of $596.20, not $650.00.  Indeed, according to 
          another lease submitted by the owner, an intermediate tenant, to be 
          referred to as prior tenant B, took occupancy on April 1, 1987 
          paying a rent of $660.00 (sic), rather than $650.00.  As stated 
          above, neither lease referred to in this paragraph included a 
          tenant's signature.  (The former had no signature page, the latter 
          had the tenant's name printed in capital letters as on the face of 
          the lease.)  In short, the August, 1987 check of prior tenant A 
          disproves the existence of prior tenancy B as well as the 
          allegation that the prior rent was $650.00 (or 660.00).  On 
          December 13, 1989 the owner was requested to explain this 
          discrepancy but failed to do so.







          Docket No. EG910164RO

          Based on the record as a whole, the Commissioner hereby finds that 
          the Administrator correctly found the prior rent to have been 
          $512.56.  Furthermore, because the owner's 1988 registration showed 
          the August 1, 1984 rent for prior tenant A to be $545.65, and 
          because the owner failed to document that rent, although requested 
          to do so on December 13, 1989, the Commissioner hereby finds that 
          the Administrator correctly used $512.56 rather than $545.65 for 
          the period the apartment was unregistered.

          Regarding the vacancy factor, despite the owner's allegation to the 
          contrary, the two alleged comparable leases as submitted by the 
          owner in response to the Administrator's March 29, 1990 request 
          were of page one only, i.e., did not include the tenants' 
          signatures.  The Administrator was correct not to accept them as 
          proof and accordingly was correct not to allow a vacancy factor.  
          Although the Administrator's order explicitly stated  why the 
          comparable  lease had not been accepted, the owner does not submit 
          a signed copy on appeal but inccorectly asserts the submitted 
          comparable lease had been signed and alleges the he had never been 
          informed of any defect in the submitted leases.  The long 
          procedural history stated above belies both contentions.

          The Commissioner notes that none of the five allegedly comparable 
          leases submitted by the owner on March 20, 1990 (which were 
          returned to the owner by the Administrator) could have been used as 
          the required comparable.  All those leases commenced in 1988 or 
          1989 and therefore could not have the lease the owner was required 
          to rely on to determine the highest comparable rent as of October 
          1, 1987.

          Regarding the owner's undocumented allegations that a stove and 
          refrigerator were installed at unspecified dates for which the 
          Administrator had given no allowance, if the owner is referring to 
          the two rent increases (for $34.00 and $24.00) for which the 
          Administrator requested but did not receive documentation, the 
          Commissioner finds that the Administrator properly disallowed those 
          increases.  If the owner is referring to appliances allegedly 
          installed but unrelated to the $24.00 and $34.00, the Commissioner 
          finds the allegations are behind the scope of review since not 
          raised before the Administrator.  (The Commissioner notes that rent 
          increases for new appliances under ETPA require tenant approval.)

          Finally, the commissioner hereby finds that the owner has failed to 
          establish by a preponderance of the evidence that the overcharge 
          was neither willful nor negligent.

          The owner alleged that the prior owner did not inform him of the 
          Rent Guidelines system.  If so, the owner was at least negligent in 
          not determining his obligation under the law.  The Commissioner 
          further notes that the complainants' 1988 renewal lease was exactly 
          a Guidelines increase over the initial (illegal) rent, even though 
          that lease was entered prior to the filing of the tenants' 












          Docket No. EG910164RO

          complaint.  (This Order is without prejudice ot the owner's right, 
          if any, to proceed against the prior owner in a court of competent 
          jurisdiction.)

          Furthermore, the record as a whole, including the owner's inability 
          to document his allegations to the contrary, best supports the view 
          that the owner based his vacancy rents on market value and/or the 
          law of supply and demand.   Moreover, the tenants documented, and 
          the owner did not deny, that the owner collected $1000.00 in 
          security, i.e., $300.00 more than the illegal rent.  Nevertheless, 
          their lease showed that only $700.00 was collected.  When 
          confronted with this, the owner responded to the Administrator that 
          when they move out will get their security back.  Although not 
          directly related to the monthly rent overcharge, this attitude 
          towards his obligations under ETPA further indicates that treble 
          damages were properly imposed.  (The Commissioner notes that the 
          DHCR does not have jurisdiction over the owner's obligation to pay 
          interest on the security deposit.  The tenants are advised to 
          contact the New York State Attorney General regarding that 
          obligation.)  However, the Administrator's order to refund the 
          excess security is hereby affirmed.

          The Commissioner has determined in this Order and Opinion that the 
          owner collected overcharges of $17,986.41, including treble 
          damages.  This Order may, 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, be filed and enforced as a 
          judgment or not in excess of twenty percent per month of the 
          overcharge may be offset against any rent thereafter due the owner.  
          Where the tenant credits the overcharge, the tenant may add to the 
          overcharge, or where the tenant files this Order as a judgment, the 
          County Clerk 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 Emergency Tenant Protection Act 
          and Regulations, it is

          ORDERED, that this petition be, and the same hereby is, denied and 
          the Rent Administrator's order be, and the same hereby is, 
          affirmed.

          ISSUED:



                                                                            
                                             Lula M. Anderson  
    

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