FG 210185 RO

                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          --------------------------------X     S.J.R. 6442 (MANDAMUS)
          APPEAL OF                             DOCKET NO.: FG 210185-RO

                                                DRO DOCKET NO.: ZDD-210353-R
                 SLOCUM REALTY CORP.,
                 C/O LIMAN MANAGEMENT,          TENANT: ARTHUR SCHNEIDER      


          On July 24, 1991 the above-named petitioner-owner filed a Petition 
          for Administrative Review against an order issued on June 20, 1991  
          by the Rent Administrator, 92-31 Union Hall Street, Jamaica, New 
          York concerning the housing accommodations known as 10 Ocean 
          Parkway, Brooklyn, New York, Apartment No. B6 wherein the Rent 
          Administrator determined that the owner had overcharged the tenant.

          Subsequent thereto, the owner filed a petition pursuant to Article 
          78 of the Civil Practice Law and Rules seeking an expeditious 
          determination of its petition for administrative review.  On July 
          30, 1992 the Supreme Court, Kings County ordered the Division to 
          issue a determination on or before October 30, 1992.

          The Administrative Appeal is being determined pursuant to the 
          provisions of Sections 2523.4(a) and 2526.1 of the Rent 
          Stabilization Code.

          The issue herein is whether the Rent Administrator's order was 

          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 in April, 1989 in which he 
          stated that he had commenced occupancy on September 15, 1977 at a 
          rent of $300.00 per month, that he was currently paying $580.26 per 
          month, and that the owner had failed to reduce his rent to $478.00 
          as of March, 1986 as directed in Docket No. KS-003704-S on October 
          14, 1986. 

          In answer, the owner contended that it had never received a copy of 
          any order in Docket No. KS-003704-S, and that it received a copy of 
          a March 16, 1989 letter from the Division of Housing and Community 
          Renewal's (DHCR's) Compliance Bureau to the tenant stating that the 
          service decrease case was considered closed because the tenant had 
          indicated that the owner had complied with the directives in the 

          FG 210185 RO


          In Order No. ZDD-210353-R, issued on June 20, 1991 the 
          Administrator froze the collectible rent at the $459.62 rent 
          registered on April 1, 1985, and determined an overcharge of 
          $20,671.82 as of June 30, 1991, including treble damages beginning 
          two years prior to the date of the tenant's complaint.

          In this petition, the owner contends in substance that it received 
          the tenant's service decrease complaint on February 21, 1986; that 
          it promptly submitted an answer which established that all repairs 
          had been completed; that in July, 1986 it moved its offices from 16 
          Court Street, Brooklyn to 10 Ocean Parkway, Brooklyn; that the 1986 
          registration advised the DHCR that the owner's mailing address was 
          P.O. Box 255, Brooklyn [Note:  this was the address of the managing 
          agent, Michael Diamond, c/o Liman Management.  Slocum Realty 
          Corporation at 16 Court Street, Brooklyn 11241 was registered as 
          the owner.  The rent reduction order was sent to the owner at 16 
          Court Street, Room 1004, Brooklyn 11241]; that it did not receive 
          a copy of the rent reduction order, Docket No. ZKS-003704-S, 
          purportedly issued on October 14, 1986, from either the DHCR or the 
          tenant; that no copy of the order was sent to the owner at either 
          P.O. Box 255 or 10 Ocean Parkway; that the owner believed the 
          matter to be closed, until it received a March 16, 1989 letter from 
          the DHCR's Compliance Bureau, stating that the matter was "closed" 
          because the owner had complied with the directives in the order, 
          and advising the owner to file an application to restore the rent; 
          that the March 16, 1989 letter, which was the owner's first notice 
          that an order had been issued in Docket No. ZKS-003704-S, did not 
          enclose a copy of the order or advise of its contents; that the 
          owner immediately filed a rent restoration application, which was 
          received by the DHCR on March 23, 1989; that the DHCR has not even 
          assigned a docket number to it; that the owner therefore filed 
          another application, which was assigned Docket No. FE-210801-OR; 
          that it has still not, to date, received a copy of the rent 
          reduction order and was unaware of the amount of the reduction; 
          that the rent records submitted in answer to the complaint 
          established that, but for the rent reduction, all rents charged the 
          tenant have been lawful; that the May 3, 1991 Final Notice from the 
          DHCR proposing the imposition of treble damages was the owner's 
          first notice of the amount of the rent reduction in Docket No. ZKS- 
          003704-S; that it could have filed a successful rent restoration 
          application in October, 1986 if it had been served with the rent 
          reduction order when it was issued in that month; that the DHCR 
          should have at least processed and granted its 1989 rent 
          restoration application, particularly since the Compliance Bureau 
          had already found that the owner had restored the services whose 
          reduction was complained of in Docket No. ZKS-003704-S; that the 
          owner's answer to the overcharge complaint apprised the DHCR that 
          the owner was unaware of the amount of the rent reduction and was 
          unable to comply with the order; that the DHCR's order finding an 
          overcharge is therefore arbitrary and capricious; that there was no 
          willful overcharge collected from the tenant; that any overcharge 
          collected was based solely on the multitude of errors committed by 
          the tenant and the DHCR in not furnishing a copy of the order 
          despite the owner's repeated statements that it had not seen it, 
          and by the DHCR's arbitrary failure to process the 1989 rent 
          restoration application even though the DHCR had already found that 

          FG 210185 RO

          services had been restored; and that treble damages should not be 

          In answer, the tenant asserts in substance that he presented a copy 
          of the rent reduction order to Kate Norman, the Executive Secretary 
          of Slocum Realty, and that a copy of the order was on file in the 
          office of his Congressperson, Charles Schumer, who sent several 
          letters to the owner.

          In reply Kate Norman, the office manager for Slocum Realty 
          Corporation, submitted an affidavit stating that no person employed 
          by Slocum Realty had seen or received a copy of the order, that the 
          tenant had not provided her with a copy of the order at any time, 
          and that Congressperson Schumer's letters did not mention or 
          forward a copy of the order.

          The Commissioner is of the opinion that this petition should be 

          The Commissioner initially notes that this order does not consider 
          whether the order (Docket No. ZKS-003704-S) reducing the rent for 
          a service decrease was warranted.  That issue was considered in the 
          Commissioner's order issued under docket number FL 210060-RO on 
          September 30, 1992.  When the owner's 1991 rent restoration 
          application (Docket No. FE-210301-OR) was denied on November 13, 
          1991, the owner filed a Petition for Administrative Review (Docket 
          No. FL 210060-RO) against the denial.  The order denying that 
          appeal found that the 1986 rent reduction order was mailed to the 
          owner at the address registered by the owner on the 1986 
          registration statement; that the owner did not file a Petition for 
          Administrative Review of that order after becoming aware of its 
          existence; that the March 16, 1989 letter from the Compliance 
          Bureau clearly stated that the rent would not be restored until the 
          owner filed a rent restoration application and it was approved by 
          the DHCR; that the tenant's oral statement to the Compliance Bureau 
          that repairs had been completed, such statement later being 
          repudiated when the repairs proved to be ineffective, would not 
          have been sufficient to warrant rent restoration; that even if the 
          owner did file a rent restoration application in 1989 there is no 
          evidence to indicate that the application would have been granted; 
          and that the owner had not established that the conditions on which 
          the rent reduction was based had been repaired prior to the 
          issuance of the November 13, 1991 order denying a restoration of 
          the rent.

          Section 2523.4(a) of the Rent Stabilization Code provides in 
          pertinent part that "[a] tenant may apply to the DHCR for a 
          reduction of the legal regulated rent to the level in effect prior 
          to the most recent guidelines adjustment, 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 Administrator's order under appeal herein correctly found an 
          overcharge beginning March 1, 1986 based upon Order No. ZDD-210353- 
          R, since that order is now administratively final.  The only issue 
          remaining is whether it was appropriate to impose treble damages.

          FG 210185 RO

          Absent some unusual circumstance which would cause the DHCR to 
          grant an owner's request for a stay, the filing of a Petition for 
          Administrative Review ("PAR") against a rent reduction order does 
          not stay the mandate to reduce the rent, although it does stay the 
          refund of the excess rent [based on the difference between the 
          actual rent charged and the reduced lawful rent] prior to the date 
          of the order.  That is, when a rent reduction order is issued, an 
          owner must begin charging the reduced rent.  In addition, the 
          filing of a rent restoration application does not stay the rent 
          reduction.  Thus, even if the owner had filed both a PAR and a rent 
          restoration application in 1986, it would have been obligated to 
          collect no more than $459.62 per month until a DHCR order allowed 
          a higher amount.  [As noted earlier, the owner's contentions about 
          the correctness of the initial and continuing rent reduction were 
          recently rejected on the merits.]  Section 2526.1(a) of the Rent 
          Stabilization Code provides in pertinent part that treble damages 
          shall be imposed on overcharges unless an owner establishes by a 
          preponderance of the evidence that they were not willful.  Policy 
          Statement 89-2 provides in pertinent part that "the burden of proof 
          in establishing lack of willfulness shall be deemed to have been 
          met... [w]here an owner adjusts the rent on his or her own within 
          the time afforded to interpose an answer to the proceeding and 
          submits proof to the DHCR that he or she has tendered, in good 
          faith, to the tenant a full refund of all excess rent collected, 
          plus interest."  When the owner received the March 16, 1989 letter 
          from the Compliance Bureau it was, at least by that time if not 
          also in October, 1986, on notice that an order had been issued in 
          Docket No. KS-003704-S reducing the rent, and that the rent was 
          still reduced and would not be restored until the DHCR granted an 
          application to do so.  When the owner received the tenant's 
          overcharge complaint two months later it was put on notice that the 
          order in Docket No. KS-003704-S had reduced the rent effective 
          March, 1986.  [The tenant was incorrect in citing $478.00, which 
          was his rent on the effective date of the rent reduction.  The 
          order actually reduced the collectible rent to the rent in effect 
          on April 1, 1985, which was $459.62.]  At that point the owner 
          could have avoided the possibility of treble damages by refunding 
          the overcharge since March, 1986.  The owner did not do so.  
          Further, the owner has not established that the overcharge was not 
          willful.  Accordingly, the imposition of treble damages was 

          This order may, upon the expiration of the period in which the 
          owner may institute a proceeding pursuant to Article 78 of the 
          Civil Practice Law and Rules, be filed and enforced in the same 
          manner as a judgment or not in excess of twenty percent per month 
          thereof may be offset against any rent thereafter due the owner.

          THEREFORE, in accordance with the Rent Stabilization Law and Code, 
          it is

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

          FG 210185 RO


                                          JOSEPH A. D'AGOSTA
                                          Acting 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