EL-210400-RO
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-210400-RO
LENBED REALTY,
DRO DOCKET NO.:
PETITIONER CA-210257-R
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
On December 10, 1990 the above named petitioner-owner filed a
Petition for Administrative Review against an order issued on
November 16, 1990 by a District Rent Administrator concerning
housing accommodations known as Apartment 6-H at 50 Lenox Road,
Brooklyn, New York, wherein the District Rent Administrator deter-
mined that the tenant had been overcharged in the amount of
$168.31 including treble damages.
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 by the filing of a rent
overcharge complaint by the tenant on December 8, 1987.
The tenants took occupancy pursuant to a one-year lease com-
mencing December 1, 1982 and expiring November 30, 1983, at a
monthly rent of $220.75. At the time of the complaint, the
tenant's rent was $561.00.
The owner was served with a copy of the complaint and was di-
rected to submit a complete rent history from the base date,
including copies of all leases. The owner complied with this
request.
In Order No. CA 210257-R, issued on November 16, 1990, the
District Rent Administrator determined that the tenant had been
overcharged a total of $168.31, including treble damages. Initial
overcharges of $1.22 per month were determined for the
lease term commencing on June 1, 1987, as based upon the improper
addition of an MCI increase to the base rent before calculating
the guidelines increase. Subsequent overcharges of $1.50 per
month and $1.63 per month for the next two lease terms were
entirely the result of the initial error.
In its petition, dated December 10, 1990, the owner contends that
the determination to impose treble damages was improper, as the
miscalculation was not willful.
The Commissioner is of the opinion that this petition should be
granted.
Section 26-516 of the Rent Stabilization Law provides that any
owner who is found by the DHCR to have collected an overcharge
shall be liable to the tenant for treble damages unless the owner
establishes by a preponderance of the evidence that the
overcharge was not willful, in which case interest shall be
imposed. Section 26-516 also provides that treble damages shall
be applied only to overcharges occurring on or after April 1,
1984.
As further explicated in Policy Statement 89-2, the DHCR acknow-
ledges that in certain situations the burden of proof in
establishing lack of willfulness would be deemed to have been met
and, therefore, the treble damages penalty would not be imposed.
One such situation is when the overcharge is caused by the
hypertechnical nature of the rent computation. An example that
is expressly stated in the policy statement is when a guideline
increase is mistakenly applied to the rent on September 30th,
plus a "supplementary adjustment", including (but not limited to)
an MCI increase that had only become effective after September
30th.
In the instant case, the Administrator's calculations clearly
show that the initial overcharge of $1.22 per month was the sole
result of adding the MCI increase to the base rent on September
30, 1986, even though the MCI increase only became effective on
June 1, 1987, at the commencement of the new lease. Since this
situation is exactly the same as the enumerated exception in the
policy statement, the imposition of treble damages was improper.
A recalculation of the legal rent without treble damages results
in a reduction of total overcharges to $61.30.
THEREFORE, in accordance with the Rent Stabilization Law and
Code, it is
ORDERED, that the owner's petition be, and the same hereby is
granted, and the Administrators order be, and the same hereby is
modified in accordance with this order and opinion.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
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