Adm. Review Docket Number: FD 810058-RO
                                 STATE OF NEW YORK
                           OFFICE OF RENT ADMINISTRATION
                                    GERTZ PLAZA
                              92-31 UNION HALL STREET
                              JAMAICA, NEW YORK 11433

        APPEAL OF                           :  DOCKET NO.: FD 810058-RO 
             DOWNING MANAGEMENT,            :  DRO DOCKET NO.: 
                                            :               SEK-9-1-0114-R
                              PETITIONER    :          

        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

        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 

        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 

        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 

        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.

                                        ELLIOT SANDER
                                        Deputy Commissioner

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