SJR7181; FF510343RO

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

      APPEAL OF                              DOCKET NO. SJR7181;FF510343RO
      124 Realty Company                  :  DISTRICT RENT OFFICE
                                             DOCKET NO. DC510077R
                                             TENANT: Xiomara Rivera           
                            PETITIONER    : 

                                     IN PART

      On June 27, 1991, the above-named owner filed a Petition for 
      Administrative Review against a Rent Administrator's order of May 29, 
      1991, concerning the housing accommodations known as apartment C-8 at 
      124 Fort George Avenue in New York City, wherein the Rent Administrator 
      determined that there had been a rental overcharge.

      The petitioner later sought an order from the Supreme Court under 
      Article 78 of the Civil Practice Law and Rules, mandating this Division 
      to expeditiously determine the administrative appeal herein, and the 
      court has issued such an order.

      The tenant had filed an overcharge complaint on March 6, 1989, which was 
      mailed to the owner on March 31, 1989.  In April of 1991 the owner 
      provided the Administrator with copies of pertinent registration forms 
      and leases.  Later that month the Administrator sent the owner a "Final 
      Notice . . . [of] Imposition of Treble Damages on Overcharge" stating:

      "The processing in this . . . complaint . . . has been completed to the 
      point that [it] will result in an Order being issued based on the record 
      as shown below.

      "You are hereby notified that . . . the . . . evidence indicates that 
      the overcharge is willfull . . .

      "This Notice affords you a final opportunity to submit evidence to rebut 
      a finding that the overcharge was willful."

      (The aforementioned "record as shown below" consisted of the 
      Administrator's findings as to the actual and lawful rentals for the 

          SJR7181; FF510343RO

      period running from March 1, 1988, through February 28, 1991.)

      The owner's answer to that notice, dated May 7, 1991, stated inter alia 
      that the owner had (by its check for $3,262.47 dated May 7, 1991, a copy 
      of which was enclosed) corrected an "inadvertent miscalculation of the 
      rent" for the lease term that had commenced on April 1, 1987.  (The 
      check was said to have included interest at nine percent.)

      In the ensuing order, here appealed, the Administrator used the Initial 
      Registered Rent of April 1, 1984, as the initial lawful ("base") rent, 
      found that the rent charged had exceeded the lawful rents in all 
      subsequent lease periods, and trebled the amount to be refunded for the 
      reason that the overcharge had been willful.  The owner now disputes all 
      those determinations.

      The petition assigns error as follows.  (1) Because the owner received 
      notice of the tenant's complaint in April of 1989, applicable law 
      precludes this Division, in the instant circumstances, from employing as 
      a base rent any rental in effect before April 1, 1985.  (2) The 
      Adminstrator should not have trebled the refund for any overcharge 
      imposed during the rental period governed by order number 15 of the Rent 
      Guidelines Board.  (3) The aforementioned refund was "timely" and 
      "full," so as to preclude the Administrator from assessing treble 
      damages.  (4) When making that refund, the owner also adjusted the rent, 
      effective June 1, 1991, to $351.22 (as explained in the owner's 
      submission of May 7, 1991), but the Administrator did not take that 
      adjustment into account in his computations.  (5) The $3,262.47 refund 
      was similarly excluded from those computations.  (6) The Administrator 
      ignored the fact that the tenant had not paid rent since October 1990.  
      (7) "An additional indication of the agency's mishandling of this matter 
      is that on May 20 1991 . . . the agency . . . requested numerous items 
      [from the owner].  The time to answer . . . expired June 10, 1991.  
      However, the agency . . . issued the instant order on May 29, 1991!" 
      (Emphasis in original.)

      The tenant in response states among other things:  (a) The overcharge 
      was calculated only from the time of her tenancy, "clearly within the 4 
      year statute of limitations for filing overcharge complaints."  (b) The 
      refund from the owner was for less than the overcharge (before 
      trebling).  (c) "In fact the original finding was for approximately 
      $15,000 and was subsequently reduced to approximately $11,800, so the 
      petitioner is not correct when it states that its refund . . . was not 
      taken into account in the final determination."  (d) "It is correct that 
      in the Housing Court matter, I have withheld rent.  However, as the 
      affidavit attached to my order to show cause, annexed herein . . . 
      indicates I have serious repair problems . . . which the landlord 
      refuses to fix."  (e) As to petitioner's last argument:  the Division 
      only requested information that the owner supplied in its May 7 answer.  
      "It would appear the second notice was probably a duplicate as it stated 
      no answer had been received . . . "

          SJR7181; FF510343RO

      The Commissioner is of the opinion that this petition should be granted 
      in part.

      Petitioner's first argument must fail because it employs as a reference 
      point, the time at which an owner receives notice of a tenant's 
      complaint.  The pertinent event is not such  receipt, but rather the 
      filing of the complaint by the tenant, which occurred herein in March of 
      1989.  Section 2526.1(3)(i) of the Rent Stabilization Code provides in 
      pertinent part that the "base" rent for purposes of determining an 
      overcharge, "shall be deemed to be the rent shown in the annual 
      registration statement filed four years prior to the most recent 
      registration statement ..."; that means in the instant case: the rent 
      shown in the registration statement filed four years before the 
      registration statement for April, 1988, i.e., the registration statement 
      for April 1984.  Thus the Administrator did not err in commencing her 
      calculations with that rent as the base rent. 

      The initial overcharge herein was calculated under the aforementioned 
      Guidelines Board order 15.  Contrary to what petitioner asserts, no 
      authority of which the Commissioner is aware (including the prior 
      Commissioner's decisions cited by petitioner) absolutely precludes the 
      imposition of treble damages for overcharges collected during the period 
      governed by that Guidelines Board order.  And although the Commissioner 
      will not impose treble damages where the owner establishes non- 
      willfulness, in the instant case the owner failed to sustain the burden 
      of proving same.  The record shows not only overcharges under order 15, 
      but additional overcharges each time a new tenant assumed occupancy.  
      Thus the owner did not prove non-willfulness pertaining to order 15, and 
      the Administrator correctly assessed treble damages.

      We turn now to the question of whether the aforementioned refund 
      precluded the imposition of treble damages.  The applicable standards 
      are from Policy Statement 89-2 issued by the Division.

           [T]he burden of proof in establishing lack of willfulness
           shall be  deemed to have been met and, therefore, the treble 
           damage penalty is not applicable *** [w]here [inter alia] 
           an owner adjusts the rent on [its] own within the time afforded 
           to interpose an answer to the proceeding and submits proof to 
           the DHCR that [it] has tendered, in good faith, to the tenant[,] 
           a full refund of all excess rent collected, plus interest.

      In the instant case, the owner did not make the refund within the time 
      afforded to interpose an answer pursuant to Policy Statement 89-2.  
      Refunding in response to the Notice to Submit Evidence that the 
      overcharge was not willful is insufficient.  Therefore the imposition of 
      treble damages was warranted.

          SJR7181; FF510343RO

      The rent calculation chart also takes into account a service-reduction 
      order for which the lawful stabilization rent was reduced--docket 
      CJ530100B--and which was not taken into account by the Rent 

      As to the owner's protest that a rental adjustment effective in June of 
      1991 has not been considered herein, the order under review covers rents 
      through May of that year; the Administrator thus found no overcharge for 
      the period starting in June, and obviously did not need to consider an 
      adjustment made at that time.

      In answer to petitioner's next assertion, that the refund made to the 
      tenant should at any rate be subtracted from the Administrator's award, 
      the tenant implies, as related above, that indeed it was so subtracted.  
      The Commissioner, however, sees no sign of such subtraction in the 
      Administrator's order, and will therefore perform it herein (on the 
      aforementioned chart).

      Turning to the assertion that the tenant paid no rent after October of 
      1990, the tenant does not dispute same, and therefore (a) no overcharge 
      will be calculated from November of that year through the end of the 
      period covered herein, and (b) the rent due will be subtracted from the 
      trebled overcharge total.  The Commissioner notes that this order is 
      issued without prejudice to any services-related rental abatement that 
      may be ordered by a court of competent jurisdiction.

      Petitioner's final complaint, regarding insufficient time to answer an 
      inquiry, is found to be without merit in view of petitioner's failure to 
      mention any item of information or documentation that it has been 
      prevented from submitting by virtue of that error.

      The owner is directed to reflect the findings and determinations made in 
      this order on all future registration statements, including those for 
      the current year if not already filed, citing this order as the basis 
      for the change.  Registration statements already on file, however, 
      should not be amended to reflect the findings and determinations made in 
      this order.  The owner is further directed to adjust subsequent rents to 
      an amount no greater than that determined by this order plus any lawful 

      If the owner has already complied with the Rent Administrator's order 
      and there are arrears due to the owner as a result of the instant 
      determination, the tenant shall be permitted to pay off the arrears in 
      twenty-four equal monthly installments.  Should the tenant vacate after 
      the issuance of this order or have already vacated, said arrears shall 
      be payable immediately.

      The Commissioner has determined in this Order and Opinion that the owner 
      collected net overcharges of $5176.61.  This order may, upon expiration 
      of the period for seeking review of this Order and Opinion pursuant to 
      Article Seventy-eight of the Civil Practice Law and Rules, be filed and 

          SJR7181; FF510343RO

      enforced as a judgment, or not in excess of twenty percent per month of 
      the overcharges may be offset against any rent thereafter due the owner.  
      Where the tenant credits the overcharge the tenant may add thereto, or 
      where the tenant files this order as a judgment, the Couunty Clerk may 
      add thereto, interest at the rate payable on a judgment pursuant to 
      section 5004 of the Civil Practice Law and Rules, from the date of the 
      Rent Administrator's order to the date of the Commissioner's order.

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

      ORDERED, that this petition be, and the same hereby is, granted in part, 
      and that the order of the Rent Administrator be, and the same hereby is, 
      modified in accordance with this Order and Opinion.  The lawful rent as 
      of May 31, 1991, was $334.75.


                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner


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