FI 410499 RT

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

      ------------------------------------X  SJR 6521
      APPEAL OF                              DOCKET NO. FI 410499 RT

                                          :  DISTRICT RENT OFFICE
           Pablo DePinies,                   DOCKET NO. L 005335-R
                                             OWNER: Windsor Plaza Co.   

                            PETITIONER    : 


      On September 24, 1991, the above-named tenant filed a Petition for 
      Administrative Review against an order issued on August 21, 1991, by a 
      Rent Administrator, concerning the housing accommodations known as 952 
      5th Avenue, New York, New York, Apartment No. 5D, wherein the 
      Administrator determined that there had been no net rental overcharge.

      The tenant later petitioned the Supreme Court, pursuant to Article 78 of 
      the Civil Practice Law and Rules, to reverse the "deemed denial" of his 
      Petition for Administrative Review, and pursuant to the parties' 
      subsequent stipulation, Justice P. Tom has remitted the matter to the 
      Commissioner for decision within a specified time.

      This proceeding originated with the tenant's 1985 complaint of rental 
      overcharge.  That complaint stated inter alia that the tenant had been 
      "advised": that the prior tenant had leased a number of apartments in 
      the building, at unlawfully high rents, in exchange for permission to 
      sublet at a profit; and that certain "small capital improvements" and 
      "cosmetic alterations" made to the apartment, did not constitute a 
      "substantial demolition."

      In response the owner submitted documentation indicating: that it had 
      filed with the Division and served on the previous tenant, "Avon 
      Furniture," a form "RR-1" (initial apartment registration) indicating 
      that said Avon Furniture was the tenant as of 4/1/84 (although its 
      lease, providing for a monthly rental of $1350, had expired on August 
      31, 1983); that the owner had spent $10,768.91 on improvements to the 
      apartment during the vacancy preceding the tenant's occupancy; that (as 
      the tenant's complaint had stated) the tenant's initial monthly rental 
      had been $3100; that the complainant's initial lease had provided:

           Tenant recognizes that the old apt. was substantially 
           demolished and rebuilt, including enlarged kitchen with new 
           equipment, cabinets, etc., new bedroom, closets, dining room, 
           flooring and tiles, double hung baked enamel on aluminum 
           window units with insulated glass and screens . . .;

          FI 410499 RT

      and that Avon Furniture, at the time it was served with the 
      aforementioned form RR-1, was leasing five apartments in the subject 

      The aforementioned order (here appealed) ensued, the Administrator 
      determining therein (inter alia): that the "Initial Legal Registered 
      Rent" of the subject apartment was the aforementioned $1350; and that 
      the owner had spent the aforementioned $10,768.91 on vacancy 
      improvements, entitling it to add 1/40 of that sum to the complainant's 
      initial monthly rental.  The petitioner now challenges both 

      Petitioner first states that the 1984 registered rent of $1350 should 
      not be deemed the initial legal rent herein, because service of that 
      registration form was made upon an "illusory tenant" with no motive to 
      challenge that rental figure.  As the first tenant "in a position to 
      challenge" same, the argument continues, petitioner should have been 
      allowed to do so.

      Concerning the Administrator's allowance of a rental increase of 
      $269.22, based on the finding that the aforementioned $10,768.91 was 
      spent on improvements, petitioner submits: that no "back-up 
      documentation" was submitted to him, so as to enable him to challenge 
      the owner's claims in that regard; and that most of the claimed 
      improvements consisted of "normal repairs and maintenance" for which an 
      owner cannot impose a rental increase.

      After careful consideration of the record, the Commissioner is of the 
      opinion that this petition should be denied in part, and the proceeding 
      remanded for redetermination of the remainder.

      Turning first to the questioned improvements, the Commissioner finds 
      problematic the following language in the petition: "[N]o back-up 
      documentation was submitted to the Tenant so as to enable Tenant to 
      challenge the claim of Landlord.  Tenant would be in the best position 
      to ascertain whether in fact the work was done."  What petitioner means 
      by "back-up" documentation is not clear; the owner at any rate 
      substantiated -- through copies of bills and cancelled checks -- the 
      work in question (and petitioner does not assert any defect in service 
      of documents upon him).  And the assertion that the tenant would best be 
      able to ascertain if work had been done cuts two ways, for the same 
      tenant signed the above-quoted lease, indicating most emphatically that 
      extensive work had indeed been done.  (The tenant claims neither forgery 
      of his signature nor coercion of any kind; in fact he makes no attempt 
      to explain why he, in the "best position" to know better, agreed in 
      writing that all those improvements had been made.)

      Finally, the record does not indicate that any of the questioned work 
      constituted mere maintenance.  There is in sum no basis for overturning 
      the Administrator's determination to allow a rental increase for vacancy 

      The determination regarding the initial legal registered rent, on the 
      other hand, cannot be sustained.  If not objected to within 90 days of 
      service upon the tenant of the 1984 form RR-1, the rent registered by 
      filing that form cannot be challenged.  The RR-1 must, however, have 
      been served on the tenant of the apartment in question.  A "tenant," 
      under section 2520.6 of the Rent Stabilization Code, is a party to a 

          FI 410499 RT

      rental agreement who is "obligated to pay rent for the use or occupancy 
      of a housing accommodation."  (Emphasis added.)  Avon Furniture being a 
      business entity (and in the complete absence of evidence that it housed 
      employees, students, etc., in its leased apartments), there is no basis 
      for a finding that the 1984 form was served on someone who had agreed to 
      pay for "housing," i.e., that it was served on a tenant.  Further Avon 
      Furniture has already been found to be an illusory tenant in Avon 
      Furniture Leasing, Inc. v. Emanuel Popolizio, 500 N.Y.S.2d 1019 (A.D.1  
      Dept. 1986) appeal denied 508 N.Y.S. 2d 1028, 68 N.Y.2d 610 (1986).  And 
      without such service of the RR-1 and passage of the aforementioned 90 
      days, a challenge to the 1984 rent remains available.  

      This proceeding must therefore be remanded for redetermination of the 
      tenant's complaint.  On remand the Administrator will grant the $269.22 
      increase for improvements discussed supra, but will not be bound in 
      his/her calculations, by the 1984 registered rent.  Rather the owner is 
      required to submit a rental history for the subject apartment from April 
      1, 1980, and the tenant should be given an opportunity to comment on 
      such rental history.

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

      ORDERED, that this petition be, and the same hereby is, denied in part 
      as set forth above, and that this proceeding be, and the same hereby is, 
      remanded for redetermination of the remaining issues as also set forth 
      above.  The Administrator's determination as to the rent shall remain in 
      effect until he issues a new order.


                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner


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