FG 410101-RT
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.: FG 410101-RT
Patricia Avila, DISTRICT RENT ADMINISTRATOR
DOCKET NO.: ZBH-410011-RP,
(L-3110064-R, CDR 28954,
BC 410154-RO)
Owner:
PETITIONER Friedman Mgmt. Company
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On July 5, 1991 the above named petitioner-tenant filed a
Petition for Administrative Review against an order issued on May
30, 1991 by the Rent Administrator, 92-31 Union Hall Street,
Jamaica, New York concerning housing accommodations known as
Apartment 1A at 15 East 94th Street, New York, New York, wherein
the Rent Administrator determined that the owner had overcharged
the tenant.
On August 14, 1991 the petition was rejected as untimely.
Subsequent thereto, the tenant filed a petition in Supreme Court
pursuant to Article 78 of the Civil Practice Law and Rules
contending that her Petition for Administrative Review should be
deemed to be timely filed. The proceeding was remitted to the
DHCR, and the tenant's petition is herein decided on the merits.
The Commissioner notes that this proceeding was filed prior to
April 1, 1984. Sections 2526.1(a)(4) and 2521.1(d) of the Rent
Stabilization Code (effective May 1, 1987) governing rent
overcharge and fair market rent proceedings provide that
determination of these matters be based upon the law or code
provision in effect on March 31, 1984. Therefore, unless
otherwise indicated, reference to Sections of the Rent
Stabilization Code (Code) contained herein are to the Code in
effect on April 30, 1987.
The issue in this appeal is whether the Rent Administrator's
order was warranted.
The applicable sections of the Law are Section 26-516 of the Rent
Stabilization Law, Sections 2523.5(f), 2526.1(a) and 2526.1(d) of
the current Rent Stabilization Code and Section 2J of the former
Rent Stabilization Code.
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 in March,
1984 of a rent overcharge complaint (Docket No. L-3110064-R) by
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the tenant, in which she stated that she had commenced occupancy
on August 20, 1979 at a rent of $450.00 per month.
The owner was served with a copy of the complaint and was
requested to submit rent records to prove the lawfulness of the
rent being charged. In answer to the complaint, the owner
submitted a complete rental history from the base date as
required.
In an order issued on February 9, 1987 the District Rent
Administrator determined that the tenant had been overcharged in
the amount of $18,255.96 as of August 31, 1986, and directed the
owner to refund such overcharge to the tenant as well as to
reduce the rent. The overcharge resulted because the owner
charged the prior tenant a rent of $228.97 in his last renewal
lease, rather than the $385.92 that could have been charged, but
then based the complainant's vacancy rent on $385.92.
The owner's appeal of the order was assigned Docket No.
BC 410154-RO. In his appeal Bernard Friedman contended that when
he bought the building he was given a February 14, 1978 letter
[this also being the date of the closing], from the assistant
treasurer of the trust department of a bank to a realty company,
explaining that the [prior] tenant had been given a renewal lease
commencing November 1, 1977 for approximately $150.00 less than
could have been charged by the Managing Agent of the bank as
executor of the estate of the prior owner; and that this was in
lieu of compensation for work that the [prior] tenant was doing,
at the request in late 1977 of a member of the prior owner's
family, to oversee and help in the operation of four small
apartment buildings connected with the estate. The owner also
contended that the selling broker had assured him that the credit
was handled properly and would not be construed to be a reduction
of rent.
In an order issued on August 14, 1987 the Commissioner remanded
the proceeding for a thorough consideration of the allegation
that the prior tenant's rent did not accurately reflect the full
rental value to the then tenant because said rental amount
incorporated a credit for services rendered to the estate of the
prior owner.
The new proceeding was assigned Docket No. BH-410011-RP. In that
proceeding the owner was requested to, but did not, submit
documentary evidence to establish the rent actually paid by the
prior tenant in his last lease from November 1, 1977 to October
31, 1978. On May 30, 1991 the Administrator issued a new order,
which based the complainant's vacancy rent on the $362.37 rent in
the prior tenant's penultimate lease rather than the $385.92 that
could have been charged in the prior tenant's final lease, and
determined an overcharge of $4,431.71 as of August 31, 1986,
including treble damages on overcharges occurring on and after
April 1, 1984.
In her petition against that order, the tenant contends in
substance that the February 14, 1978 letter from a colleague of
the executor of the estate of the former owner constitutes
hearsay of little probative value, since it refers to the
executor's "records" as the source of authority for the
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reduction, without either enclosing such records or furnishing an
elaboration by someone with actual knowledge of the matter; that
the odd amount of the reduction - $156.95 - calls into question
the credibility of the executor as well as the unknown reason for
the estate giving the prior tenant a reduced rent rather than
simply paying him a salary for his services; that no evidence was
offered showing that the work was the kind for which rent could
legally be temporarily reduced, and then increased with the
advent of a vacancy; and that case law establishes both that a
complete rental history from the base date is required and that
affidavits from former tenants, analogous to the belated letter
offered by the owner, may be found by the DHCR to lack probative
value. The tenant also asserts in substance that the owner's
failure to abide by the Rent Stabilization Code entitles her to
be awarded attorney's fees. With her petition the tenant has
enclosed an invoice from her attorney for preparing and
submitting the petition.
The owner did not submit an answer to the tenant's petition,
although given an opportunity to do so.
The Commissioner is of the opinion that this petition should be
denied.
While the tenant is correct about the necessity of a full rental
history, the owner did furnish leases from the base date,
including the prior tenant's last lease at a rent of $228.97 even
though the rent could have been as much as $385.92. When the
owner did not substantiate the prior tenant's payment of a rent
of $228.97, the Administrator based the complainant's initial
rent on the rent of $362.37 in the previous lease, which has not
been disputed, and imposed treble damages. If the Administrator
had based the complainant's rent on the purported rental value,
including credit for services rendered, of $385.92 in the last
lease, there would have been no overcharge found. While the
February 14, 1978 letter from the Assistant Treasurer of Chase
Manhattan Bank was probably written because of the sale of the
property on that same day (although not for the purpose of any
pending Conciliation and Appeals Board proceedings), the
Commissioner finds plausible the bank officer's explanation of
the reason behind an offer of a lease for $228.97 to a tenant who
had paid $362.37 in his previous lease and $330.93 in his first
lease. This is clearly not a situation where an owner has waived
a right to base future rents on a higher rent by charging a low
rent, typically in whole dollars, in an attempt to fill a vacant
apartment. The Commissioner considers it sufficient that the
prior tenant's last lease is not allowed to increase the lawful
stabilization rent above the amount charged in his penultimate
lease, and that treble damages were imposed for the owner's
failure to document that the rent recited in his last lease was
actually paid.
Without deciding the circumstances where it might be appropriate
to award attorney's fees for the work of a tenant's attorney in
appealing an Administrator's order, the Commissioner does not
find that the owner should be required to pay the tenant
$1,750.00 for her costs of attacking an order which has been
found by this order to have been warranted in the first instance,
and which is unchanged from the way it would have been if the
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tenant had not gone through the expense of challenging it.
Because of the possibility that the rents charged were not
reduced after the Administrator's order [indeed, the annual
apartment registrations indicate that the owner has been charging
a rent of $624.87 per month from September 1, 1986 through at
lease April 1, 1991], the owner is cautioned to adjust the rent,
in leases after those considered by the Administrator, to amounts
no greater than that determined by the Administrator's order plus
any lawful increases, and to register any adjusted rents with the
Administrator's order being given as the reason for the
adjustment. Because of the possibility that the tenant herein
may have vacated by the time that this determination is issued, a
copy of this determination s being mailed to the tenant-in-
occupancy.
This order may, upon the expiration of the period in which the
owner may institute a proceedi g pursuant to Article seventy-
eight of the civil practice law and rules, be filed and enforced
by the tenant in the same manner as a judgement or not in excess
of twenty percent thereof per month 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, affirmed. The lawful stabilization rent is $530.76 per month
in the lease commencing September 1, 1984. The total overcharge
as of August 31, 1986, including excess security of $32.60, is
$4,431.71.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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