FJ 410278-RO; FJ 410554-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. FJ 410278-RO
FJ 410554-RT
Amuke Realty Co. : DISTRICT RENT OFFICE
(Michael Hrynenko, Pres.), DOCKET NO. ZCH-410539-R
prior owner and
Luiz Antonio Rosa, CURRENT OWNER:
tenant, 29 St. Marks Realty Corp.
PETITIONERS :
------------------------------------X
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
NO. FJ 410278-RO AND GRANTING PETITION FOR ADMINISTRATIVE REVIEW
NO FJ 410554-RT
On October 29, 1991 the above-named petitioner-owner, and on October 31,
1991 the above-named petitioner-tenant, filed Petitions for
Administrative Review against an order issued on September 27, 1991 by
the Rent Administrator, 92-31 Union Hall Street, Jamaica, New York
concerning the housing accommodations known as 29 (or 29 E, or 29 East)
St. Marks Place, New York, New York, Apartment No. B wherein the Rent
Administrator determined that the owner had overcharged the tenant.
Because there have been several proceedings, involving either the prior
tenant or the complainant, relevant to these appeals, set forth below is
a chronological listing of various events, including a notation as to
the source of the information:
1 10-1-82: Prior tenant Tom O'Hara commences occupancy at a rent of
$450.00 [Complaint in AD-410236-R]
2 4-1-84: Effective date of initial apartment registration of Tom
O'Hara at $450.00, with apartment status "Other" due to "Owner
Occupancy", with no lease dates listed
3 10-1-84: Tom O'Hara's rent increases to $504.00 [Complaint in AD-
410236-R]
4 4-1-85: Effective date of 1985 apartment registration of Tom O'Hara
at $504.00, with apartment status "Rent Stabilized" and stating "No
lease. Month to Month"
5 9-6-85: Amuke Realty sends 1985 registration to Tom O'Hara, stating
month-to-month tenancy at $504.00 with no lease. [Amuke Realty's
answer in AD-410236-R]
6 4-1-86: Effective date of 1986 registration, with same information
as 1985 registration
FJ 410278-RO; FJ 410554-RT
7 4-15-86: Date of complaint by Tom O'Hara in AD-410236-R, in which
he states that the apartment has never been registered
8 4-17-86: Date of agreement for Tom O'Hara to vacate by 4-30-86 in
exchange for being given $5,000.00, being forgiven five months rent
($2,520.00), and having Amuke Realty pay his $144.47 Con Edison
bill [Owner's answer in AD-410236-R. The proceeding was later
terminated on 6-7-91.]
9 9-15-86: Sergio Franca de Sousa pays $600.00 rent and $600.00
security [rent receipt, signed by Vera Gina of Amuke Realty,
submitted by tenant in CH-410539-R]
10 10-1-86: Sergio Frana de Sousa commences occupancy at rent of
$600.00
11 12-1-86: Christina Rodrigues commences occupancy [Amuke Realty's
Petition for Administrative Review in FJ 410278-RO]
12 1-8-87 Luiz A. Rosa (complainant) moves in without a lease
[Tenant's complaint in CH-410539-R]
13 Date January, 1987 or February, 1987: Christina Rodrigues commences
occupancy [Tenant's answer in FJ 410278-RO]
14 4-1-87: Effective date of 1987 registration for Christina Rodriguez
at a rent of $626.56 due to a Major Capital Improvement, with no
lease dates listed
15 June, 1987: Christina Rodriguez vacates [Tenant's 7-1-91 answer in
CH-410539-R]
16 8-1-87: The first rent check of the tenant received by Amuke Realty
[Amuke Realty's petition in FJ 410278-RO]
17 3-1-88: The tenant files No. CC-410039-RV, claiming that Amuke
Realty refuses to give him a lease but then threatens him because
he does not have a lease
18 3-31-88: Michael Hrynenko of Amuke Realty claims that the subject
apartment is an owner-occupied registered apartment, rented on a
temporary, month-to-month basis to Sergio Franca de Sousa, a friend
of the owner's employee; that Mr. de Sousa left the country; that
the tenant moved into the apartment without authority to do so; and
that all Con Edison bills have been billed to Amuke Realty since
1980. He enclosed a 6-7-84 Con Edison bill, and an 10-18-84 Con
Edison security deposit receipt, both listing him at the subject
apartment [Amuke Realty's answer in CC-410039-RV]
19 4-1-88: Effective date of 1988 registration of apartment as being
occupied by Michael Hrynenko at a rent of $618.74 due to a Major
Capital Improvement, with no lease dates given, and with apartment
status of "Rent Stabilized" due to "Owner Occupied/Employee."
20 7-30-88: Amuke Realty mails the 1988 registration to Michael
Hrynenko at the subject apartment [Tenant's answer in CC-410039-RV]
21 8-22-88: Date of tenant's complaint docketed as CH-410539-R (the
FJ 410278-RO; FJ 410554-RT
order which has been appealed in this proceeding)
22 1-30-89: The tenant submits a statement that the owner is refusing
to give him a lease [CC-410039-RV]
23 4-1-89: Effective date of 1989 registration of apartment as being
occupied by Michael Hrynenko at a rent of $618.74 due to a renewal,
with no lease dates given, and with apartment status of "exempt"
due to "Owner Occupied/Employee."
24 4-1-90: Effective date of 1990 registration of apartment as being
occupied by Michael Hrynenko at a rent of $618.74, with no lease
dates given, and with apartment status of "Rent Stabilized." (This
is the last registration appearing on the DHCR's computerized rent
registration system.)
25 4-26-90: Date of answer by tenant in CC-410039-RV, in which he
states that Amuke Realty is fraudulently registering the apartment
as owner-occupied; that he, not Amuke Realty, has been paying the
electric bill, phone bill and rent since January, 1987; and that he
is not an employee of Amuke Realty. The tenant included a copy of
the envelope in which Amuke Realty mailed the 1988 registration to
Michael Hrynenko (its president) at the subject apartment; copies
of several cancelled rent checks from 12-15-87 to 2-5-90; telephone
bills in his name for February and March, 1990: cancelled checks to
Con Edison in February, 1990; and a 2-17-88 3-day notice from Amuke
Realty demanding payment of the $603.10 rent for February ($618.74
minus previous overpayments of $15.64).
26 9-14-90: The tenant makes the same contentions and submissions as
on 4-26-90, and additionally contends that his tenancy is not
"without consent" of the owner, since the owner has accepted his
rent for 45 months and has failed to bring an eviction proceeding;
that he is entitled to a written lease; that the owner sends him
the Con Edison bills each month; that he is therefore being forced
to pay a commercial rate for residential use of electricity; that
the owner has never lived or performed any business functions in
the subject apartment; that neither the owner's family nor the
owner's employees reside in the apartment; that neither his current
nor previous roommates have been employed by or related to the
owner; that the owner has committed perjury by registering the
apartment as owner occupied; that the owner is engaging in the same
fraudulent scheme in other rent-stabilized units owned under other
corporate names such as "Forage Realty Corp." and "Kiev Realty
Corp." [Michael Hrynenko submitted the agreement between Tom
O'Hara and Amuke Realty on Forage Realty Corporation letterhead,
with the same address as Amuke Realty]; that the owner has falsely
registered 37 1/2 St. Marks Place, Apt. A-2, owned as Forage Realty
Corporation, as "owner occupied/exempt"; and that the purpose of
this illegal scheme is to enable the owner to collect unlawful
rents on the falsely-registered stabilized units and to avoid
paying any income taxes on the unreported rental income of such
units. In addition to documents submitted earlier, the tenant
enclosed his cancelled rent checks, endorsed by Amuke Realty,
through August, 1990; cancelled checks to Con Edison through July,
1990; and Con Edison bills for March and April, 1990, such bills
being for "service to Amuke Realty Corp. for renting purposes at 29
St. Marks Place B", with "Rate EL2 Small Non-Resid." [Answer in
FJ 410278-RO; FJ 410554-RT
CC-410039-RV]
27 11-16-90: An order is issued in CC-410039-RV, determining that the
tenant is entitled to a written lease, directing Amuke Realty to
offer a vacancy lease commencing at least 120 days after the offer,
and directing Amuke Realty to update the registration within 30
days of the order.
28 12-17-90: The tenant affirms that Amuke Realty has not complied
with the order in CC-410039-RV. [CC-410039-RV]
29 12-27-90: An amended order is issued in CC-410039-RV, directing
Amuke Realty to offer a "written" lease rather than a "vacancy"
lease
30 1-11-91: Date of notice from Amuke Realty to tenants that 29 St.
Mark's Realty Corp. is the new owner. [Tenant's 7-2-91 answer in
CH-410539-RO]
31 4-1-91: The tenant begins paying his rent into an escrow account
[Tenant's 7-2-91 answer in CH-410539-R]
32 4-19-91: The tenant states that he had an oral lease with Amuke
Realty to reside in the apartment [Tenant's answer in CH-410539-R]
33 6-7-91: Prior tenant Tom O'Hara's complaint in AD-410236-R is
terminated because the condition was resolved.
34 7-2-91: Date of answer by tenant in CH-410539-R, in which he
contends that he paid $600.00 per month to Amuke Realty from
January, 1987 through May, 1987; that he paid $618.74 per month to
29 St. Marks Realty Corp. beginning 2-1-91, with the rent paid into
an escrow account beginning 4-1-91 due to the new owner's failure
to repair; that Sergio de Sousa, his former roommate, had lived in
the apartment in 1986; that other tenants in the building state
that there was an elderly rent-controlled tenant living in the
apartment at some point prior to Mr. de Sousa's tenancy; that
Christina Rodrigues lived with him in the apartment from February
to June, 1987; that $450.00 is not the lawful 4-1-84 rent; that
none of the other apartments in the building rented for anywhere
near $450.00 on 4-1-84; that both the 1984 building registration
summary, as well as an Owner's Application for Certification of
Rent Roll, obtained by Amuke Realty when it bought the building and
submitted to the DHCR with the date deleted, list the apartment as
exempt rather than rent stabilized; and that the DHCR should
therefore require evidence of leases prior to 1984. The tenant
enclosed a 9-15-86 rent receipt from Amuke Realty showing Sergio
Franco de Sousa as paying security of $600.00 and rent of $600.00
for October, 1986, and an Application for Certification of Rent
Roll, with the date deleted but appearing to have been in the
1960's, by Amuke Realty and the executor of the estate of Walter
Swindunovich, with the latter's address given as 29 St. Mark's
Place and with the subject apartment listed as owner-occupied.
(The DHCR's files contain an undated document from the N.Y.C. Rent
and Rehabilitation Administration, listing Walter Swidunovich as
the owner and determining that the subject apartment occupied by
Olga Zaremba was not subject to Rent Control.)
FJ 410278-RO; FJ 410554-RT
35 9-27-91: Order is issued in CH-410539-R, naming the new owner 29
St. Marks Realty, and finding an overcharge of $9,653.40, including
excess security and treble damages, from 1-1-87 through 3-31-91.
The lawful 1-1-87 rent of $529.75 is calculated as a one-year
vacancy lease increase over $466.74 (the 4-1-84 rent of $450.00 as
increased by a Major Capital Improvement). All rent calculations
are based on the tenant's submissions because Amuke Realty failed
to respond to two requests for rental information.
In his petition (Docket No. FJ 410554-RT) against the order in Docket
No. CH-410539-R, the tenant contends in substance that he agrees with
and fully accepts $450.00 as the 4-1-84 legal registered rent, that the
Rent Stabilization Code bars the owner from collecting any increase
above the base rent of $450.00 until offering a lease and properly
registering the subject apartment; that the owner has never presented
him with a proper registration but has, rather, deliberately and
fraudulently registered the apartment as owner-occupied; that Section
2528.4 of the Code therefore bars the owner from collecting any rent in
excess of the legal regulated rent in effect on April first of the year
for which an annual registration was required to be filed; and that in
any event the owner was being allowed to charge too much for the
installation of a new gas boiler, since Order No. ZLS-000873-OM divided
the cost among five apartments excluding the "owner occupied" subject
apartment, and then applied that increase to the subject apartment as
well.
The file does not contain any answer by the former or current owners.
The tenant subsequently informed the DHCR that he had vacated the
subject apartment.
Michael Hrynenko, President of Amuke Realty Corp., the prior owner, also
filed a Petition for Administrative Review (Docket No. FJ 410278-RO)
against the order in CH-410539-R. In his petition the prior owner
asserts in substance that the 4-1-84 rent was $450.00; that it was
registered for 4-1-85 as $504.00; that it remained at $504.00 on 4-1-86
with the same tenant; that a new tenant De Sousa moved in in December,
1986 at a legal vacancy rent of $606.36; that an M.C.I. order made the
legal permanent rent $618.74; that the complainant was never brought in
as a tenant, but moved in illegally; that he first paid a rent check in
August, 1987, which was accepted; that Amuke Realty never gave him a
lease or told him what to pay; that all rent increases have been in
accordance with the Rent Guidelines Board orders; that the complainant
has never been registered as a tenant, although his rent was accepted;
that tenant Rodrigues was registered in 1987; that the petitioner
Michael Hrynenko has been registered since then, either as exempt or
with the $618.74 rent; that there was no overcharge; and that in any
case any overcharge could not have been willful since the petitioner
Michael Hrynenko never specified a rental amount or demanded the rent
from the tenant, who just sent checks in amounts that he felt
appropriate.
In answer, the tenant repeats the same assertions set forth in his own
Petition for Administrative Review, and additionally contends in
substance that, contrary to the prior owner's assertion that no rent was
demanded or specified, the prior owner accepted his checks and detailed
in writing the amount to be paid, and that the prior owner has ignored
the DHCR's order to issue his first lease ever.
FJ 410278-RO; FJ 410554-RT
The Commissioner is of the opinion that the owner's petition (Docket No.
FJ 410278-RO) should be denied, and that the tenant's petition (Docket
No. FJ 410554-RT should be granted.
The Administrator's order (Docket No. CH-410539-R) under appeal deemed
leases beginning in January, 1987 (when the tenant commenced occupancy)
to correspond with the dates when the tenant's rent was increased. No
leases were deemed for the period from April, 1984 through December,
1986. The tenant is contending that no leases should be deemed, and no
increases allowed, above the registered 4-1-84 rent of $450.00. The
owner is essentially contending that leases should be deemed for all
tenancies and all rent increases.
A deemed lease is a lease created by the DHCR to cover a period when a
tenant has occupied an apartment without a written lease but has
voluntarily paid a rent increase. It is an equitable exemption to the
normal requirement that an owner execute a lease with a tenant in order
to receive a rent increase. Leases might typically be deemed, if at
all, in a prior tenancy in a smaller building operated on an informal
basis, where an owner charged regular increases based on Guidelines
percentages, where a tenant failed to complain of the owner's failure to
give her or him a lease, and where such tenant's voluntary payment of
rent increases while peacefully continuing in possession would not have
served to alert the owner to take action (to either offer a lease or sue
for eviction) lest it eventually be determined by the DHCR that the
voluntary payments were ineffective to increase the rent for the several
years that they were made. Because the deemed lease principle is an
equitable rule, it should not be used where an owner is undeserving of
special consideration, such as when an owner's failure to offer leases
is part of a larger pattern of depriving a tenant of her or his rights
under the Rent Stabilization Law.
The Commissioner does not find Amuke Realty or 29 St. Marks Realty Corp.
to be faultless owners deserving of special consideration. Neither has,
at least since prior to Tom O'Hara's initial tenancy on October 1, 1982,
offered any stabilized leases to any tenants, even though they had
established a landlord-tenant relationship by accepting rent for periods
of years at a time, even (when the complainant was late with the
February, 1988 rent) billing for an amount due after crediting for
payments made in excess of $618.74 after it stopped charging a temporary
M.C.I. increase. While there is no evidence in Docket No. AD-410236-R
that Amuke Realty ever attempted to evict Tom O'Hara, it did attempt to
establish a claim to its right to do so by claiming on the 1985
registration that he was a "month to month" tenant. By that time,
however, Amuke Realty had been accepting his rent payments for nearly
three years, as part of a landlord-tenant relationship, and he had all
the protections and rights given by the Rent Stabilization Law. Amuke
Realty had also registered the apartment as owner occupied in 1984, even
though there is no evidence that Tom O'Hara was an owner or even an
employee, and even though he paid rent, as shown both by the
registrations as well as by the fact that the agreement to vacate within
13 days that Amuke Realty had him sign immediately after he filed a
complaint with the DHCR included the forgiveness of five months back
rent at $504.00 per month, in addition to a payment to him of $5,000.00
and payment of his utility bill.
On April 1, 1987 the apartment was being occupied without a lease by
FJ 410278-RO; FJ 410554-RT
Christina Rodrigues (who vacated two months later) and the complainant.
The owner registered Ms. Rodrigues as a stabilized tenant. For April 1,
1988, by which time the tenant had filed a complaint that Amuke Realty
would not give him a lease yet was threatening him because he did not
have a lease, Michael Hrynenko registered himself as the stabilized
tenant at a rent of $618.74 and with no lease dates, registered the
apartment status as "owner occupied/employee", and mailed the
registration to himself at the subject apartment. The 1989
registration was similar, other than for listing the apartment as
"exempt" and for stating that "renewal" was the reason for a rent change
[even though the listed rent remained the same and even though there was
no lease to renew]. The 1990 registration [the last one appearing in
the DHCR's computerized rent registration system] again showed Michael
Hrynenko as the tenant at the same rent without a lease, although the
apartment was listed as "rent stabilized" rather than "exempt" or "owner
occupied/employee." Accurate, truthful apartment registrations are
essential for the proper functioning of the present rent stabilization
system, which relieves owners of some of the record-keeping requirements
they had under the former Rent Stabilization Code in exchange for their
annual submission of information which is relied upon in future
proceedings. The 1984, 1988 and 1989 registrations falsely claimed that
the subject apartment was occupied by the owner or an employee. The
1988, 1989 and 1990 registrations falsely claimed that Michael Hrynenko
was the tenant. In addition, the complainant did not acquiesce in
voluntarily paying rent increases without a lease. Approximately one
year after he commenced occupancy he filed a complaint about not being
given a lease. Six months later he filed an overcharge complaint which
questioned, among other things, "[h]ow does rent increase apply when
tenant has not been provided with a legal lease?" Despite these
complaints the prior owner did not offer him a lease, and in fact the
present owner apparently continued in that refusal even after being
ordered by the DHCR to offer a lease.
[The Commissioner notes that in a petition verified on January 15, 1992
in a proceeding to evict the tenant for non-payment of the rent which he
had been putting in escrow since April, 1991 because of certain alleged
conditions in his apartment, the attorney for the current owner 29 St.
Marks Realty Corp. stated that the tenant had entered into possession
pursuant to a lease wherein he promised to pay a monthly rent of
$564.18, that the owner had registered rents and services, and that the
owner was in compliance with the Rent Stabilization Law and Code. DHCR
records indicate that all of these statements are untrue, since the
tenant has never had a lease, since the registrations were either false
(1984, and 1988 to 1990) or not done at all (1991), and since the owner
did not give the tenant a lease, even after being ordered to do so.
The trial date was adjourned to March 31, 1992. Six weeks after that
date the tenant informed the DHCR of a new address.]
For all the reasons set forth above, the Commissioner finds that there
was a pattern of attempting to deprive tenants of their rights under the
Rent Stabilization Law, that therefore leases should not be deemed for
any rent increases after the initial registration, and that the
presumption of willful overcharge has not been rebutted, so treble
damages should be imposed. As was done by the Administrator, leases are
also not deemed for periods prior to the complainant's tenancy because
the owner did not respond to requests for rental data about them. The
Commissioner has set forth the lawful stabilization rents and the amount
of overcharge on an amended rent calculation chart attached hereto and
FJ 410278-RO; FJ 410554-RT
made a part hereof.
Section 2528.4 of the Rent Stablization Code provides that:
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
elimination, prospectively of such penalty.
The initial registration cannot be considered to constitute proper
compliance with registration requirements, since it falsely claimed that
the apartment was exempt because of owner occupancy. Several later
registrations falsely claimed either owner/employee occupancy and/or
that Michael Hrynenko was a stabilized tenant. Pursuant to Section
2528.4, as well as Sections 2522.4(a)(2) and 2522.4(a)(4) of the Code
and Sections 41 and 42B of the former Code (which provide in pertinent
part that an owner may not increase the rent for an MCI unless the lease
contain a clause providing for an increase during the lease term based
upon an order by the rent agency or the Rent Guidelines Board) the
$16.74 increase granted for a Major Capital Improvement ("MCI") may not
be added to the lawful rent until the owner both amends the
registrations to state the correct information and gives a written leae
to the tenant then in occupancy. At that time the MCI increase may be
added, prospectively only (i.e., with no arrears). Only $16.74 may be
added at that time, with no increases due to Guidelines. The failure to
give any written leases since before the base date also means the owner
is not entitled to any Guidelines or vacancy increases for any tenancies
or any rent increases charged before a written lease is given. This
loss of increases is permanent; no potential past increases may be
recouped upon the giving of a written stabilized lease. That is, the
lawful stablization rent is $450.00 until the owner offers a written
lease and amends the registrations; $466.74 [$450.00 plus the $16.74 MCI
increase] is the base on which any future Guidelines increases would be
calculated.
Section 2526.1(f) of the current Rent Stabilization Code provides in
substance that for overcharges collected on or after April 1, 1984, a
current owner shall be respond for all overcharge penalties, including
penalties based upon overcharges collected by any prior owner. This
means that the tenant may collect the $27,101.78 in overcharges
attributable to Amuke Realty Corp. through January 31, 1991 from either
Amuke Realty Corp. or from 29 St. Marks Realty Corp. 29 St. Marks Realty
Corp. is solely liable for the overcharges which it collected beginning
February 1, 1991. Overcharges are calculated only through March 31,
FJ 410278-RO; FJ 410554-RT
1991, since the tenant started paying his rent into escrow on April 1,
1991. If the tenant was eventually required to pay rent for periods
after March 31, 1991 he may wish to file another overcharge complaint.
This order is issued is without prejudice to any rights that the current
owner may have against the prior owner for overcharges reimbursed by the
current owner which the prior owner had collected.
The owner is cautioned to adjust the rent, in leases after those
considered in this order, to amounts no greater than that determined by
this order plus any lawful increases, and to register any adjusted rent,
with this order being given as the reason for the adjustment. Because
the complainant has vacated, a copy of this order is being sent to the
current tenant.
This order may, upon the expiration of the period in which the owner or
prior 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.
THEREFORE, in accordance with the provisions of the Rent Stabilization
Law and Code, it is
ORDERED, that the owner's petition be, and the same hereby is, denied;
that the tenant's petition be, and the same hereby is, granted; and that
the Rent Administrator's order be, and the same hereby is, modified in
accordance with this order and opinion. The lawful stabilization rents
and the amounts of overcharge are set forth on the attached rent
calculation chart, which is fully made part of this order.
The total overcharge is $25,995.50 as of March 31, 1991. The lawful
stabilization rent is $450.00 per month as of March 31, 1991.
ISSUED:
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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