EJ110288RO
                               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.: EJ110288RO
                                                          EK110035RT

            Dominick D'Alleva &               DRO DOCKET NO.: 059134
            Thomas Bucci, owners,
                   and
            David Panichi, tenant,

                                 PETITIONER    
       ------------------------------------X                             


           ORDER AND OPINION GRANTING OWNER'S PETITION FOR ADMINISTRATIVE 
          REVIEW IN PART AND GRANTING TENANT'S PETITION FOR ADMINISTRATIVE
                                   REVIEW IN PART

       On October 31, 1990, the above-named petitioner-owner refiled a Petition 
       for Administrative Review against an order issued on October 5, 1990 by 
       the Rent Administrator, concerning the premises known as 23-05 30th 
       Avenue, Astoria, New York, Apartment No C3, wherein the rent 
       Administrator determined the fair market rent pursuant to the special 
       fair rent guideline promulgated by the New York City Rent Guidelines  
       Board for use in calculating fair market rent appeals.  On November 5, 
       1990 the above-named petitioner-tenant filed a Petition for 
       Administrative Review against the same order.

       In his administrative appeal, the owner enclosed a photocopy of his 
       answer to a DHCR notice, along with supporting documents, which was date- 
       stamped received by the DHCR on October 2, 1990.  A review of the record 
       of the proceeding before the Administrator indicates that the owner's 
       submission of October 2, 1990, including comparability data, although 
       received by the DHCR, did not reach the file of the Rent Administrator 
       prior to issuance of the order.  Inasmuch as it was not considered by the 
       Administrator, that submission will be considered during administrative 
       review.

       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 appeals.  

       This proceeding was originally commenced in January, 1986 by the filing 
       of a fair market rent appeal by the tenant, who took occupancy pursuant 
       to a lease which commenced October 1, 1985 at a monthly rental of 
       $700.00.

       In response to various notices from the DHCR, the owner stated, among 
       other things, that all other apartments in the subject line were rent 
       controlled as of November, 1985 and therefore those apartments would not 
       be useful as comparable apartments.  The owner submitted copies of rent 
       rolls for the subject building and neighboring buildings.  The owner also 
       asserted that under the holding in the case of JRD Management Corp,  the 






       EJ110288RO


       owner was not required to provide rent records prior to 1984, four years 
       prior to the most recent apartment registration.

       By notice dated August 2, 1990, the owner was afforded an opportunity to 
       submit data for other lines of apartments.

       The record indicates that the owner responded by a submission received by 
       the DHCR on October 2, 1990, but that submission did not reach the 
       Administrator prior to issuance of the Administrator's order.  In this 
       submission the owner listed rental information for three lines of 
       apartments in neighboring buildings, indicating that the following 
       apartments have the same number of rooms as the subject apartment and 
       were rented to a first stabilized tenant within four years prior or one 
       year subsequent to the renting of the subject apartment:  Apartment 6D at 
       25-90 35th Street; Apartment 1B at 23-30 31st Road; Apartment 4D at 34-20 
       32nd Street.  The owner asserted that no comparable apartments were 
       available within the subject building and therefore these apartments in 
       neighboring buildings should be used as comparables.  The owner submitted 
       the following supporting documents:

       For Apartment 6D, above, the owner submitted a renewal lease commencing 
       on February 1, 1986 and terminating on January 31, 1987 at a monthly 
       rental of $806.00, carrying a rider which provided that rent adjustments 
       were to conform with the lease dated January 14, 1985.  The owner further 
       submitted a copy of the Form DC-2 dated March 27, 1985 for said housing 
       accommodation, which stated that it became vacant on January 1, 1985, and 
       that the negotiated first rent was $775.00 per month, based on "rent 
       comparables".  The form was signed "Received" by the tenant on January 
       10, 1986.

       For Apt. 1B, above, the owner submitted a vacancy lease commencing on 
       June 1, 1986 and terminating on May 31, 1987 at a monthly rental of 
       $775.00, along with a copy of the Form DC-2 dated July 10, 1986 for said 
       housing accommodation, which states that it became vacant on May 14, 
       1986, and the 1974 Maximum Rent was $191.82 per month.  Appended thereto 
       was a copy of a certified mailing addressed to the tenant, returned 
       undelivered on September 3, 1986, following two attempted deliveries.

       For Apartment 4D above, the owner submitted a vacancy lease commencing on 
       January 1, 1986 and terminating on December 31, 1986 at a monthly rental 
       of $800.00, along with a copy of Form DC-2 dated December 20, 1985 for 
       said housing accommodation, which states that it became vacant on 
       November 21, 1985, and that the initial legal regulated rent of $800.00 
       was based on comparability.  This was signed "Received" by the tenant on 
       December 20, 1985.

       In Order No. 059134 dated October 5, 1990, the Rent Administrator 
       adjusted the initial legal regulated rent by establishing the fair market 
       rent of $384.24 effective October 1, 1985, based on the special fair 
       market rent guideline.  The owner was directed to refund to the tenant 
       excess rent payments totalling $17,489.75, and to adjust the rent to the 
       lawful stabilized rent consistent with that decision.

       In this petition, the owner alleges that the Division failed to consider 
       the evidence submitted by the owner with regard to comparability and that 
       the DHCR is constrained to apply the holding in In Re JRD Management Corp 
       to this case.



       EJ110288RO



       In response to the owner's petition for administrative review, the tenant 
       states, among other things, that the information submitted by the owner 
       regarding comparability of neighboring apartments is highly suspect and 
       inconclusive; that the owner did not supply any formal rent history for 
       those apartments, and therefore that it is possible that those tenants 
       are being overcharged; and that treble damages should be imposed.  

       In his petition, the tenant alleges that the Administrator made an error 
       in computations for the lease period October 1, 1988 to September 30, 
       1990.  Additionally, the tenant seeks treble damages, or, in the 
       alternative, interest and legal fees.  In response to the tenant's 
       petition, the owner restated his position that the Administrator erred in 
       disregarding the comparable rents he submitted, and stated that judicial 
       and administrative precedent prohibit the awarding of treble damages in 
       a fair market rent appeal.

       The Commissioner is of the opinion that the owner's petition for 
       administrative review should be granted in part, and that the tenant's 
       petition should be granted in part.

       Pursuant to Sections 2522.3(e) and (f) 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:

            (e)(1) Legal regulated rents, for which the time to file a fair 
            Market Rent Appeal has expired and no Fair Rent Appeal is then 
            pending, or the Fair Market Rent 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; and

            (f) where the rents of the comparable housing accommodations 
            being considered are legal regulated rents, for which the time 
            to file a fair market rent appeal has expired, and such rents 
            are charged pursuant to a lease ending more than one year prior 
            to the commencement date of the initial lease for the subject 
            housing accommodation, such rents shall be updated by 
            guidelines increases for year renewal leases, commencing with 
            the expiration of the initial lease for the comparable housing 
            accommodation to a date with 12 months prior to the renting of 
            the housing accommodation involved.

       The owner has submitted data for the subject line which indicates that 
       all of those apartments were subject to rent control as of November, 1985 
       and therefore none of those apartments are useable as comparables.
       However, the Commissioner has reviewed the owner's October 2, 1990 
       submission of comparable rents, which includes data for three lines of 
       apartments in neighboring buildings, and finds that the comparability 
       data submitted by the owner is adequate to warrant the use of one of the 
       apartments submitted by the owner as a comparable in determining the fair 






       EJ110288RO


       market rent for the subject apartment. 

       For Apartment 1B at 23-30 31st Road, the owner has submitted adequate 
       documentation of the initial stabilized rental in the form of a lease, 
       and has documented service of the DC-2 notice on the initial stabilized 
       tenant of that apartment.  That apartment was rented to the initial 
       stabilized tenant within one year of the initial rental of the subject 
       apartment.  There was no tenant challenge to the initial rent; therefore 
       the initial rent is no longer subject to challenge, and may be used in 
       the comparability study.  The Commissioner notes that the owner complied 
       with the statutory requirements of service of the DC-2 notice by mailing 
       the notice by certified mail, although the notice was unclaimed.  Since 
       the requirement was thus fulfilled, the initial stabilized rent of 
       $775.00 for that apartment may be utilized in the comparability study.  

       Regarding apartment 6D at 25-90 35th Street and apartment 4D at 34-20 
       32nd Street, the Commissioner finds that the owner failed to submit proof 
       of service of the DC-2 notice by certified mail and that the signature of 
       the tenant on the notice is not adequate to meet the statutory 
       requirements.  It is also noted that the owner improperly indicated on 
       the DC-2 form that the initial rent was based on comparability.  Since 
       the owner has not fulfilled the requirements for proper service of the 
       DC-2 notice for those apartments, the apartments may not be utilized in 
       the comparability study.  

       The fair market rent is determined as follows:  the result of the special 
       guidelines formula, $384.24, is averaged with the comparable rent amount 
       of $775.00, resulting in the fair market rent of $579.62, effective 
       October 1, 1985.  Since the $700.00 per month initial legal regulated 
       rent challenged by the tenant exceeds the $579.62 fair market rent 
       established in this order, the initial legal regulated rent is adjusted 
       from $700.00 to $579.62 effective October 1, 1985, the date of 
       commencement of the initial rent stabilized lease.  The resultant excess 
       rent to be refunded to the tenant has been computed on the attached rent 
       calculation chart, which is hereby made a part of this order.

       Further, the Commissioner is of the opinion that In Re JRD v. Eimicke, 
       148 A.D. 2d 610, 539 N.Y.S. 2d 667 (App. Div. 2d Dept., 1989), is not 
       applicable to this proceeding.  The change effected by Section 14(g) of 
       the Omnibus Housing Act and Section 26-516(g) of the Rent Stabilization 
       Law, as applied in the JRD case, only involves rent overcharge 
       proceedings, and does not apply to fair market rent appeals.

       The tenant's petition for administrative review is based on an alleged 
       error in computations by the Administrator.  The Commissioner finds that 
       the Administrator erred in computing the excess rent due for the period 
       October 1, 1988 to September 30, 1990.  That error has been corrected in 
       the attached rent calculation chart.

       With regard to the tenant's contention that the imposition of treble 
       damages was warranted, Section 2526.1 of the current Rent Stabilization 
       Code provides that any owner found to have collected an overcharge above 
       the authorized rent shall be liable for a penalty equal to three times 
       the amount of such overcharge but that if the owner establishes by a 
       preponderance of the evidence that the overcharge was not willful, the 
       DHCR shall establish the penalty as the amount of the overcharge plus 
       interest.  Further, treble damages may not be based upon an overcharge 



       EJ110288RO


       having occurred more than two years before the complaint is filed or upon 
       an overcharge which occurred prior to April 1, 1984.  This section does 
       not apply to fair market rent appeals.  Pursuant to Section 26-512(b)(2) 
       of the Rent Stabilization Law, for apartments which are removed from rent 
       control and become subject to the Rent Stabilization Law by virtue of a 
       vacancy occurring after June 30, 1974, the owner is permitted to charge 
       an initial fair market rent as "agreed to by the landlord and the 
       tenant", subject to the tenant's right to challenge the initial rent as 
       exceeding the fair market rent.  If the tenant does not challenge the 
       initial rent, it becomes the legal base rent.  If the tenant challenges 
       the initial rent, a determination may be made that the tenant's initial 
       rent exceeds the proper fair market rent for the apartment.  In such 
       case, the owner is required to give the tenant a refund or credit for the 
       amount collected in excess of the fair market rent.  However, such 
       determination that the initial rent exceeds the fair market rent is 
       considered in the nature of a rent adjustment rather than a rent 
       overcharge and thus the imposition of treble damages is not warranted.  
       It is noted that rent overcharge proceedings where treble damages may be 
       imposed generally involve cases where an initial legal regulated rent 
       (fair market rent) is already established and an owner willfully charges 
       rents higher than permitted by the Rent Guidelines Board upon subsequent 
       renewal leases or refuses to submit a complete rental history thus 
       leading to the conclusion that rent overcharges occurred.  In addition, 
       Section 2526.1(g) of the Rent Stabilization Code provides that "[t]he 
       provisions of this section [Section 2526.1, concerning overcharge 
       penalties and assessment of costs] shall not apply to a proceeding 
       pursuant to Section 2522.3 of this Title (Fair Market Rent Appeal)."

       Pursuant to the above, the imposition of treble damages is not warranted.

       The owner is directed to refund or 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.

       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.

       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







       EJ110288RO


       ORDERED, that the owner's petition for administrative review, Docket No. 
       EJ110288RO be, and the same hereby is, granted in part; that the tenant's 
       petition for administrative review, Docket No. EK110035RT, 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 $8,473.39 and the monthly lawful stabilization rent is $717.59 
       effective October 1, 1988.


       ISSUED:



                                                                   
                                       JOSEPH A. D'AGOSTA
                                       Deputy Commissioner
    

TenantNet Home | TenantNet Forum | New York Tenant Information
DHCR Information | DHCR Decisions | Housing Court Decisions | New York Rent Laws
Disclaimer | Privacy Policy | Contact Us

Subscribe to our Mailing List!
Your Email      Full Name