FE 510017-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
----------------------------------x S.J.R. 5928
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.:
FE 510017-RO
189 SHERMAN ASSOCIATES, DISTRICT RENT
ADMINISTRATOR'S DOCKET
NO.:
PETITIONER CE 510107-R
----------------------------------x TENANT: WINSTON TINSON
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART AND REMANDING THE PROCEEDING TO THE RENT ADMINISTRATOR
On April 21, 1991, the above-named petitioner-owner filed a
Petition for Administrative Review against an order issued on
April 5, 1991, by a Rent Administrator concerning housing accom-
modations known as Apartment 5-F at 211 Sherman Avenue, New York,
New York, wherein the District Administrator determined that the
tenant had been overcharged in the amount of $36,073.99, in-
cluding excess security and treble damages.
Subsequent thereto, the petitioner filed a petition in the
Supreme Court pursuant to Article 78 of the Civil Practice Law
and Rules requesting that the "deemed denial" of its Administra-
tive appeal be annulled.
On October 17, 1991, an order was signed by Justice Santaella
remitting the proceeding to the Division for an expeditious
determination of the owner's administrative appeal.
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.
This proceeding was commenced by the filing of a rent overcharge
complaint by the tenant on April 4, 1988.
The tenant stated that he took occupancy pursuant to a one-year
lease commencing February 9, 1988, and expiring February 28,
1989, at a monthly rent of $629.88, and contended that this rent
was excessive for a three-room apartment.
The complaint also alleged that the only repairs completed at the
time of the tenant's occupancy were the painting of the apartment
and the installation of a new sink.
The owner was served with a copy of the complaint and was
directed to submit a complete rent history from the base date,
including copies of all leases.
The owner submitted a letter and a one page proposal from the
general contractor who had been retained to make improvements to
the subject-apartment in the amount of $12,500.00. The docu-
ments refer to a "substantial renovation of apartment," but list
only broad categories of expenditures. The owner also submitted
the one-year lease of the prior tenant documenting rent of
$346.72 for the period from September 1, 1986 through August 31,
1987.
In a letter to the DHCR dated October 15, 1988, the tenant
alleged that the prior tenant paid much less rent and that he
wanted to know how it could have been increased to $629.88. The
tenant also stated that his rent had not yet been reduced, as was
directed in a DHCR order under Docket No. CF 530022-B, finding
reduced building-wide services, dated September 30, 1988, which
was retroactive to July 1, 1988.
On July 6, 1989, the DHCR issued an order under Docket No. CE
510110-S finding reduced apartment services, and directing a rent
reduction effective June 1, 1988.
On January 3, 1991, in response to the Administrator's request
for proof of registration for 1987 and 1988, the owner replied
that such proof was being sent separately. Additionally, the
owner disputed the tenant's challenge to the claimed cost of the
apartment improvements. Subsequently, on February 6, 1991, the
owner submitted copies of the 1987 and 1988 registrations. The
owner also submitted a copy of the check for the claimed
improvements in the amount of $12,500.00, dated June 28, 1988.
In a notice to the owner dated March 15, 1991, the Administrator
stated that a determination of actual overcharges had been made
in the amount of $9,520.56, and that the owner was thereby
afforded an opportunity to rebut the finding that the overcharge
was willful and thus avoid the penalty of treble damages. The
notice also stated that the owner had failed to register the
subject apartment in 1987 and 1988, thus freezing the rent at the
amount on March 31, 1987.
Responding to the notice in a letter dated March 26, 1991, the
owner contended that, contrary to the Administrator's notice, the
owner had properly registered in 1987 and 1988, and that proof of
registration was enclosed. Additionally, the owner questioned
the omission of the $12,500.00 claim for installed equipment,
which was completely ignored in the notice, and resubmitted the
same documentation regarding that claim that had been previously
submitted. Finally, the owner enclosed a letter signed by the
tenant on February 28, 1991 wherein the tenant agreed to withdraw
"any and all complaints with all city agencies", with prejudice,
in exchange for the owner's installation of a new entrance door
to the apartment. This letter specified the withdrawal of three
docket numbers, of which the one concerning the instant pro-
ceeding was not included.
In Order No. CE 510107-R dated April 5, 1991, the Rent
Administrator determined that the tenant had been overcharged in
the amount of $36,073.99, including excess security and treble
damages. It was determined that the owner's failure to register
in 1987 and 1988 precluded the collection of any rent increase
prior to the most recent lawful registered rent, which was found
to be $296.69 (4% guidelines increase over initial registered
rent in 1984 of $285.28). It was also found that the owner's
failure to submit leases prior to September 1, 1986 precluded his
eligibility for vacancy and supplemental allowances, and that the
owner had failed to substantiate the cost of improvements,
resulting in the denial of that entire claim. The order also
noted the two aforementioned service reduction orders but deter-
mined no additional overcharges therefrom.
In its petition, dated April 22, 1991 the owner contends that the
DHCR must annul the order because the tenant had withdrawn his
complaint as one of the "any and all" complaints referred to by
the tenant in his letter of withdrawal, dated February 28, 1991.
The petition cited several Commissioner's opinions as precedent.
The petition also objects to the omission of the vacancy and
supplemental allowances for the lease commencing September 1,
1986, stating that the 1984 registration statement was sufficient
to establish the prior tenancy and lawful rent, and that there
was thus no need for prior leases. The petition then objects to
the finding that the owner did not register the apartment in 1987
and 1988, and encloses as documentation copies of affidavits of
mailing for those years from the director of the Rent
Stabilization Association and postal receipts of bulk delivery of
mail to the tenants. Additionally, petitioner contends that the
improvements made to the apartment were so extensive as to
constitute a "gut renovation", for which proof of the exact cost
of each item is often impossible.
The petition cites as precedent an opinion in which it was noted
that the costs of "gut renovations" of that type cannot always be
broken down because the contractor often agrees to one price for
the total job. Petitioner claims that this also disproves
willfulness, which is why the treble damages penalty was
improper.
In his answer, dated May 25, 1991 the tenant denies that he ever
withdrew his overcharge complaint. He contends that he only
signed the withdrawal statement because the superintendent said
he could not have the front door replaced unless he withdrew his
complaints of service violations. However, the tenant notes that
this did not include the overcharge complaint, which is why the
docket number is not on the withdrawal statement. The tenant
also denies knowledge of repairs and construction claimed by the
owner.
In a response dated July 10, 1991 the owner maintains that the
fact that the specific docket number was omitted from the
withdrawal letter does not mean that the tenant did not want to
withdraw it.
The Commissioner is of the opinion that this petition should be
granted in part and the proceeding should be remanded to the Rent
Administrator for further investigation.
The tenant's signed statement of withdrawal of "any and all
complaints" is void. Pursuant to Section 2520.13 of the Rent
Stabilization Code, any negotiated settlement of a complaint must
be approved by the DHCR or a court of competent jurisdiction
where the tenant is represented by counsel. Since these
conditions were not met, the tenant retains the full protection
of the Code.
The record contains conflicting evidence regarding the extent and
nature of the renovations, particularly as to what portion of the
work, if any, qualifies for a rent increase pursuant to Section
2522.4(a) of the Rent Stabilization Code. Although the tenant
initialed the lease rider next to the words "apt. renov", the
complaint alleges that the only work actually completed was the
painting of the apartment and installation of a new sink. The
tenant reaffirms this in his answer to the petition, claiming
that he had "no knowledge of repairs or construction" by the
owner. The situation differs from the one in Mautner-Glick,
Docket No. BC 410344-RO, cited by the owner, in that the record
in that case established that there had been a complete or "gut"
renovation of the apartment, which the Commissioner
acknowledged was more difficult to itemize by cost. The opinion
dealt at length with the owner's difficulty in establishing such
proof. But in the instant case, the tenant denies actual
knowledge of the improvements, in addition to questioning their
cost. Significantly, the work proposal is dated February 16,
1988, just three days before the signing of the lease. The fact
that the tenant is unable to corroborate most of the work on the
proposal - which was not even paid for until June 28, 1988,
nearly four months after the tenant moved in - raises questions
as to the legitimacy of the claim which were not at issue in the
Mautner case. Moreover, the contractor in Mautner made repeated
submissions of its work records in response to the Adminis-
trator's requests for documentation. In the instant case,
however, the owner only resubmitted the same proposal which - in
its breakdown into only three categories of rewiring, resurfacing
of walls and upgrading the kitchen and bathroom - fails to sub-
stantiate the kind of "gut renovation" that relieved the owner in
Mautner from the specificity requirements that are otherwise
absolute with Section 2522.4(a) of the Rent Stabilization Code.
On remand, an investigation to establish the amount of work
actually completed - including, if necessary, an inspection of
the subject-apartment - shall be conducted. The owner should
also be afforded an opportunity to more fully itemize the work
that qualifies for a rent increase. Such determinations cannot
be made from an evaluation of the record as it now stands.
Section 2528.3 of the Rent Stabilization Code, regarding annual
registration requirements, provides:
In such manner and at such time as shall be determined by the
DHCR pursuant to Section 2527.11 of this Title (Advisory Opinions
and Operational Bulletins):
(a)An annual registration shall be filed
containing the current rent for each housing
accommodation not otherwise exempt, a
certification of services, and such other
information as may be required by the DHCR
pursuant to the RSL.
(b)Upon filing an annual registration, the owner
shall provide each tenant then in occupancy with a
copy of that portion of such annual registration
applicable to the tenant's housing accommodation.
Section 2528.4 specifies the penalty for failure to register:
The failure to properly and timely comply with the initial or
annual rent registration as required by this Part shall, until
such time as such registration is completed, bar an owner from
applying for or collecting any rent in excess of:
(a)If no initial registration has taken place, the
legal regulated rent in effect on the date that
the housing accommodation became subject to the
registration requirements of this Part; or
(b)The legal regulated rent in effect on April
first of the year for which an annual registration
was required to be filed, or such other date of
that year as may be determined by the DHCR
pursuant to Section 2528.3 of this Part (Annual
Registration Requirements).
The late filing of a registration shall result in the elimina-
tion, prospectively of such penalty.
Although the Administrator concluded that no registration
statements were filed for the subject-apartment in 1987 and 1988,
the owner submits affidavits and computer generated apartment
lists from the Rent Stabilization Association (RSA) as well as
postal receipts which establish that service of the registrations
for those years was made on all rent stabilized tenants. It is
noted that the Commissioner has accepted the RSA computer
printout mailing lists as proof of service of the apartment
registration on the tenant (Accord: AI 410034-RT). However,
there is no evidence in the record to establish that the
registrations were filed with DHCR as required by Section 2528.3
of the Code. Since the owner was not advised that the RSA
affidavit was not adequate proof of filing with DHCR, and the
record does not show that the Administrator conducted a thorough
search of DHCR records, the Commissioner is of the opinion that
the proceeding should be remanded to the Rent Administrator for a
full investigation of this question. On remand, the owner should
be afforded an opportunity to submit proof that the registrations
were filed. If the RSA provided this service such proof may
include relevant computer records of the RSA for the years in
question, or supplementary affidavits from RSA employees.
THEREFORE, in accordance with the Rent Stabilization Law and
Code, it is
ORDERED, that this petition be, and the same hereby is, granted
to the extent of remanding this proceeding to the District Rent
Administrator for further processing in accordance with this
order and opinion. The automatic stay of so much of the District
Rent Administrator's order as directed a refund is hereby
continued until a new order is issued upon remand. However, the
Administrator's determination as to the rent is not stayed and
shall remain in effect, except for any adjustments pursuant to
lease renewals, until the Administrator issues a new Order upon
remand.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
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