FK 410287 RO
STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
------------------------------------X S.J.R. 6311
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: FK 410287 RO
PAN AM EQUITIES, DRO DOCKET NO.: AA 401248 R
TENANT: MINDY GOLDMAN
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
On November 1, 1991, the above-named petitioner-owner filed a
Petition for Administrative Review against an order issued on
October 17, 1991, by a Rent Administrator, concerning the housing
accommodations known as 200 East 81st Street, New York, Apartment
No. 4A, wherein the Rent Administrator determined that the owner
had overcharged the tenant.
Subsequent thereto, the petitioner owner filed a petition in the
Supreme Court pursuant to Article 78 of the Civil Practice Law and
Rules requesting that the "deemed denial" of the petitioner's
administrative appeal be annulled. The proceeding was then
remitted to the DHCR for a determination of the petitioner's
The Administrative Appeal is being determined pursuant to the
provisions of Sections 2526.1 and 2522.4 of the Rent Stabilization
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.
The tenant originally commenced this proceeding by filing a
complaint of rent overcharge on December 30, 1985. The owner was
served with a copy of the complaint and was directed to submit a
complete rental history. The owner was advised that if it claimed
a rent increase for the installation of new equipment, it was
required to submit invoice(s) showing the cost and date of
The owner initially responded that it was reviewing its records to
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find full documentation of the costs of improvements, and would
submit a more detailed answer at a later time.
Subsequently, on March 3, 1987, the owner submitted a rent history.
It recorded that the initial registered tenant who had paid a rent
of $446.65 per month, had vacated the apartment on or about May 31,
1985; that prior to the complainant's occupancy on July 15, 1985,
the owner had entered into a contract with a general contractor for
improvements to the subject apartment costing an estimated
$16,000.00 - $18,000.00; that, unable to find verification of
payment for the full amount, the owner was only claiming $7,198.00,
as documented by a cancelled check; that, since May, 1986, the
owner had returned the tenant's rent checks uncashed pending the
resolution of the complaint, resulting in a balance of $10,516.28.
In a letter to the Division of Housing and Community Renewal (DHCR)
dated March 13, 1987, the tenant acknowledged the return of the
rent checks since May 1986. She stated that she had been
depositing them in a separate savings account. The tenant also
stated that the owner offered the tenant a $75.00 per month
reduction in rent in October 1986.
In a letter to the tenant dated March 19, 1987, the owner announced
that it was rolling back the tenant's rent and crediting
overcharges against current rent due and future rent payments. As
a result, the owner claimed a total balance of $6,110.65 due for
all rent due up to March 31, 1987.
The owner then submitted a letter to the DHCR dated October 20,
1987, wherein the owner claimed that it had relied "in good faith"
on the first set of bills from the general contractor, Arch
Construction, totaling $16,000.00, in calculating the tenant's
rent. Upon further review of its records, the owner stated that it
was reducing the rent by an additional $3.15 per month, as based on
the elimination of the cost of venetian blinds because it was a
In a letter to the tenant dated December 7, 1987, the owner
announced the new balance for rent due, in the amount of $6,047.59.
The owner informed the tenant that the rent effective January 1,
1988 would be $819.85, as adjusted to the new legal base.
In a letter to the DHCR dated January 27, 1988, which was in
response to a request for a more detailed description of 5 circled
items from the construction contract, totalling $3,755.00 out of
the claim for $7,198.00, the owner submitted a one page statement
from Arch Construction Company, dated January 13, 1988, which more
fully detailed the renovation work.
Subsequently, in a letter dated March 12, 1991, the tenant listed
the amount of rent paid for each month for the period from April
1987 through September 1989, totalling $24,527.05. She further
stated that rent was not accepted prior to April 1987, and had not
been accepted after October 1989.
On March 26, 1991, the owner submitted its own schedule of rent
payments purportedly received from the tenant.
FK 410287 RO
In the order appealed herein, issued on October 17, 1991, the
Administrator determined that the tenant had been overcharged in
the amount of $9,421.41 for the period from July 15, 1985 through
September 30, 1989, including treble damages. The order noted that
overcharges were not assessed for the period after September 30,
1989 because the owner had refused to accept rent payments
thereafter. In addition, the Administrator determined that the
owner had proven the cost of apartment improvements totalling
$6,989.36, thus allowing a monthly rent increase of $174.73.
Finally, the order noted that the rental payments for May, June and
July, 1986 were deposited in an escrow account.
In its petition, dated October 17, 1991, the owner contends that
the Administrator had made several errors in the order, which are
as follows: that the cost of a refrigerator and new venetian
blinds were omitted from the increase for new equipment, bringing
the total to $7,869.00 instead of $6,989.36; that a rent credit of
$4,232.07, covering the period from July 15, 1985 - March 31, 1987,
had been ignored by the Administrator, even though it had been
applied to the tenant's balance; that the last rent payment
received by the owner was for April 1986 and that the tenant's
assertion that she had paid rent through September 30, 1989 was
untrue; that the excess security as listed in the order was also an
error, since the aforementioned credit of $4,232.07 included
$210.72 in excess security. Furthermore, the petitioner argues,
the imposition of treble damages was improper, since it violates
the "established" rule that "a record of good faith negates the
imposition of treble damages." The petition then cites two
Commissioner's opinions, Clinton Hill Equities Group, ARU Docket
No. ARL 02037 K, and J & S Management, ARU Docket No. ARL 03483 L,
as precedent for the finding that treble damages are negated where
the owner has shown by its attempts to correct and refund
overcharges that they were not willful. Additionally, it cites
Milford Management Corp. ARU Docket No. ARL 05464 L, as holding
that when an owner attempts to rectify any overcharges after the
complaint is filed, but before the order is issued, treble damages
are not appropriate, and that this holding has been restated in
DHCR Policy Statement 89-2.
The tenant did not answer the petition.
Upon the request of the Commissioner, both parties submitted
documentation of the amount of rent paid by the tenant and of the
amount of credit towards the rent granted by the owner.
The Commissioner is of the opinion that this petition should be
granted in part.
Section 2522.4(a)(1) of the current Rent Stabilization Code
provides, in part that an owner is entitled to a rent increase
where there has been a substantial increase of dwelling space or an
increase in the services, or installation of new equipment or
improvements, or new furniture or furnishings, provided in or to
the tenant's housing accommodations. An owner may not, however,
collect a rent increase for work that constitutes normal
maintenance, painting or repairs.
In the instant case the Administrator properly disapproved the
FK 410287 RO
items that did not qualify as new equipment under the above
provision, and correctly calculated the rent increase for the
qualified items. Although the owner contends that the refrigerator
and venetian blinds were disallowed, the record indicates that they
were approved, along with most of the listed items. The
(1) replacement of front door lock, $35.00;
(2) painting, $280.00;
(3) refinishing floors, $220.00 and
(4) "miscellaneous" unspecified items costing
Since all of these items are correctly considered as normal
maintenance and repair, and thus do not qualify as improvements,
or, in the case of the "miscellaneous" items, are not sufficiently
identified to be evaluated, the amount of the claim approved for
the rent increase is correct.
The owner's contention that the presumed willfulness of
overcharges is successfully rebutted by its attempts to "rectify"
them before the actual issuance of the order is mistaken. Policy
Statement 89-2 states the burden of proof in this regard as
Where 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.
The owner has clearly not met this standard. However, the
Commissioner recognizes that "while treble damages are therefore
appropriate, they should only be applied to overcharges actually
collected" (ARU Docket No. FJ 510195 RO).
A review of the records of rent payments submitted by both parties
indicates that the tenant's records are consistent while the
owner's latest submission, dated July 7, 1992, differs from its
earlier submission, dated March 26, 1991. The tenant's submission
of June 30, 1992 includes a copy of the owner's March 26, 1991
records, and indicates total agreement for all rent payments listed
therein. Therefore, the Commissioner is accepting this as the
correct record of payment. Its only divergence from the order is
for the months of May, June and July, 1986 and December, 1987 when
no rent was paid. Accordingly, the computed overcharges for those
months, as well as the treble damages penalty, and the lawful
stabilization rents for the months which were unpaid are deducted
from the amount stated in the order resulting in a net overcharge
of $4,369.42, including treble damages, still due to the tenant for
the period under review. Contrary to the owner's contention on
appeal, there is no evidence that the excess security of $21.24
found by the Rent Administrator was ever credited to the tenant.
Because this order only adjusts the rent through September 30,
FK 410287 RO
1989, the owner is advised to adjust subsequent rents to an amount
no greater than that determined by this order plus any lawful
increases, and to register any adjusted rents with this Order and
Opinion being given as the explanation for the adjustment.
If the owner has either not received or returned the rent checks to
the tenant in the period since September 30, 1989, until the
present, or for any portion thereof, any balance of rent due to the
owner, which either may be directly payable to the owner or which
may be used as an offset against the amount of overcharges, as
adjusted herein, must conform to the legal rent as stated in the
order, plus any other rent increases authorized since that date.
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 by the tenant
in the same manner as a judgment or not in excess of twenty percent
thereof per month may be offset against any rent thereafter due the
THEREFORE, pursuant to the Rent Stabilization Law and Code, it is
ORDERED, that the petition be, and the same hereby is granted in
part; and that the Administrator's order be, and the same hereby
modified in accordance with this Order and Opinion.
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner