Adm. Review Docket Number: FD 810058-RO
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 APPEAL
APPEAL OF : DOCKET NO.: FD 810058-RO
:
DOWNING MANAGEMENT, : DRO DOCKET NO.:
: SEK-9-1-0114-R
PETITIONER :
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On April 4, 1991 the above-named petitioner-landlord filed a
Petition for Administrative Review against an order issued on March
15, 1991 by the District Rent Administrator, 55 Church Street, White
Plains, New York concerning the housing accommodations known as
Apartment 2C at 555 Broadway, Hastings-On-Hudson, New York wherein
the District Rent Administrator determined that the landlord had
overcharged the tenant.
The issue in this appeal is whether the District Rent
Administrator's order was correct. The proceeding is governed by
the Emergency Tenant Protection Act of 1974 and the Tenant
Protection Regulations.
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 in October, 1990 by the
filing of a Tenant's Complaint Of Rent Overcharge in which the
tenant contended that she had no lease, and that the owner was
attempting to charge a rent of $785.94 although a DHCR order had
previously set the lawful rent at $712.00 from November 1, 1987 to
October 31, 1989. With her complaint the tenant enclosed a February
23, 1989 order (Docket No. SCA-8-1-0004-R) which stated that, due to
the landlord's failure to timely file a 1987-88 Operating and
Maintenance Expenses Schedule, the landlord was not eligible to
collect a guideline rent increase on leases commencing between
October 1, 1987 and September 30, 1988; that the tenant's legal
regulated rent was therefore $712.00 for the period of November 1,
1987 through October 31, 1989; and that the rent would remain at
that amount until the landlord filed the financial statement,
registered the apartment and offered the tenant a lease based on a
legal rent of $712.00. The order found an overcharge of $536.86
from November 1, 1987 through December 31, 1988. The DHCR
computerized case tracking system does not indicate that the
landlord appealed that order. The tenant also enclosed an August
31, 1990 order (Docket No. SDL-8-1-0182-R) directing the landlord to
send the tenant a copy of a fully-executed renewal lease bearing the
signature of both tenant and landlord. The order noted that any
guidelines increase otherwise authorized for such lease would not be
collectible until the tenant h d received a copy of the fully-
executed lease. The tenant also sent a copy of an October, 1990
Adm. Review Docket Number: FD 810058-RO
rent bill for $785.94 and of the April 1, 1990 registration for
$785.94.
The file of the proceeding before the Administrator does not contain
a response from the landlord.
In an order issued on March 15, 1991 the District Rent Administrator
found that the lawful rent should remain at $712.00 until the
landlord complied with Section 35(9) of the Tenant Protection
Regulations, and that there had been an overcharge of $1,069.53 from
November 1, 1989 to August 31, 1990, including treble damages. The
landlord was directed to refund the overcharge to the tenant.
(Although specifying the overcharge as "$356.51 x 3," the total was
each time given as "$1,0695.30" rather than $1,069.53.)
In this petition the landlord contends in substance that it
submitted a response dated February 11, 1990, which it is enclosing
along with proof of mailing; that it "accepted the rent from the
tenant regardless of the amount until this whole matter of
eligibility for rental increases can be resolved"; that the tenant
has a renewal lease, sent to her in a timely fashion, on which she
made changes based on the DHCR order; that the landlord has accepted
her rent each month while trying, unsuccessfully so far, to resolve
the matter with regard to the Property Maintenance and Operation
Cost Survey Schedule; that the DHCR should have at least have held a
hearing to determine whether the landlord filed the requested
documents in a timely fashion; and that treble damages should not
have been imposed as it did not overcharge the tenant willfully.
With its petition the owner has included an answer dated February
11, 1991 in which it stated that it was enclosing a renewal lease
(for a rent of $748.51 per month commencing November 1, 1989) issued
to the tenant on July 1, 1989, and in which it stated that:
Tenant has in her own handwriting made changes pursuant
to DHCR order. Since management accepted the renewal
lease from the tenant with the changes it does not seem
necessary to prepare a duplicate lease. The tenant
kept one copy as instructed on the form and we have
been depositing the rent each month as directed by
Docket No. SDL-8-1-0182/R.
The answer is being considered in this appeal the same as if it had
been in the file for the Administrator's consideration.
The Commissioner is of the opinion that this petition should be
denied.
The lawful rent of $712.00 in the period from November 1, 1989 to
August 31, 1990, on the basis of which the Administrator found an
overcharge and imposed treble damages, occurred for two separate
reasons set forth in two separate earlier orders. One was a
permanent loss of the November 1, 1987 Guidelines increase due to
late filing of the Operating and Maintenance Expenses Schedule, and
the other was a temporary loss (not restored as of the end of the
period considered in the Administrator's order) of the November 1,
1989 Guidelines increase due to the failure to furnish the tenant
with a copy of a fully executed renewal lease.
Adm. Review Docket Number: FD 810058-RO
The DHCR's Research and Public Information unit had date-stamped the
landlord's 1987 financial report on July 30, 1987. Since the forms
had been delivered to the landlord on March 25, 1987, the report was
considered late. On February 23, 1989, over one and one-half years
later, the Administrator issued an order in Docket No. SCA-8-1-
0004-R. The owner did not appeal the order, so it became final and
not subject to later collateral attack (as the owner attempts to do
in this petition). The order in Docket No. SCA-8-1-0004-R set the
lawful rent at $712.00 per month from November 1, 1987 to October
31, 1989. Absent authorization from the DHCR to charge the
Guidelines increase by virtue of having furnished an acceptable
excuse for the late filing, this represented a permanent loss of the
Guidelines increase that would otherwise have been chargeable in the
lease from November 1, 1987 to October 30, 1989.
Based on the lawful rent of $712.00 in that lease, the landlord
would normally have been able to charge an increase to $747.60 in
the next lease, from November 1, 1989 to August 31, 1990. However,
Section 35(9) of the Tenant Protection Regulations (9NYCRR
2502.5[c][9]) provides that a Guidelines increase otherwise
collectible during a lease may not be collected until the first rent
payment date following the tenant's receipt of the fully executed
lease bearing the signature of both the owner and the tenant. An
order issued on August 31, 1990 in Docket No. SDL-8-1-0182/R found
that the landlord had failed to send the tenant a copy of a fully
executed lease, and directed the landlord to sent the tenant a copy
of an amended lease renewal form with a base rent of $712.00 and an
increased new rent of $747.60. The DHCR case tracking system does
not indicate that the landlord appealed this order either. The
answer submitted by the landlord in Docket No. FD 810058-RO
indicates that the landlord failed to comply with that order. The
landlord used a base of $748.51 and a new rent of $793.42 for a one
year lease, rather than $712.00 and $747.60 respectively as ordered,
and has been registering and billing a rent of $785.94. The
landlord also stated in substance that it was unnecessary to prepare
a duplicate lease as the tenant had already kept her own copy.
However, it is not sufficient just for the tenant to know what is on
a lease which she signed (after changing) and submitted to the
landlord. The landlord would undoubtedly not consider itself bound
by a lease which it had not signed (particularly when a tenant had
changed the rent on it); Section 35(9) of the Regulations gives the
tenant the right to receive a copy of a lease which is binding on
the landlord because signed by it. Even considering the February
11, 1991 answer of the landlord, the tenant had not received such a
fully-executed copy of the lease with the landlord's signature as of
the end of the time period (November 1, 1989 to August 31, 1990)
considered in the Administrator's order, so it was proper for the
Administrator to disallow the Guidelines increase through August 31,
1990 and to calculate an overcharge based on a lawful rent of
$712.00.
The landlord is not persuasive in arguing that the overcharges were
not willful, since a landlord is obligated to charge only lawful
rents and may not "accept the rent from the tenant regardless of
amount" if the amounts happen to be unlawful and particularly if the
landlord insisted on the unlawful amounts in the first place. The
landlord has repeatedly disregarded DHCR orders setting the lawful
rent (orders which it did not appeal). These actions can not be
Adm. Review Docket Number: FD 810058-RO
considered a successful rebuttal of the presumption of willfulness
that arises when an overcharge occurs; they are instead a
confirmation of willfulness. In any event, Section 71 (9NYCRR
2506.1 [a][1]) of the Regulations provides that treble damages shall
be imposed on overcharges resulting from negligence as well as from
willfulness. While the overcharge meets the standard of
willfulness, it most certainly meets the lesser standard of
negligence, so it was proper for the Administrator to impose treble
damages.
To the extent that the landlord is contending that the DHCR should
hold a hearing about the late filing of the financial report, that
contention is rejected. It was determined in an earlier proceeding
(Docket No. SCA-8-1-004-R), based on the 1987 financial report filed
late over a year and a half previous, that the lawful rent was
$712.00 for the period from November 1, 1987 to October 31, 1989.
Because of the need for finality in administrative determinations
that rent became the "law of the case" when the landlord failed to
appeal the determination during the time allowed. The validity of
that determination may not now be collaterally attacked in this
proceeding, which is essentially about whether or not the landlord
complied with the earlier order.
This order may, upon the expiration of the period in which the
landlord may institute a proceeding 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 judgment or not in excess of
twenty percent thereof per month may be offset against any rent
thereafter due the landlord.
THEREFORE, in accordance with the Emergency Tenant Protection Act of
1974 and the Tenant Protection Regulations, it is
ORDERED, that this petition be, and the same hereby is, denied and
that the District Rent Administrator's order be, and the same hereby
is, affirmed. The total overcharge, not including any excess
security, is $1,069.53 for the period from November 1, 1989 to
August 31, 1990.
ISSUED:
ELLIOT SANDER
Deputy Commissioner
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