STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. SJR7181;FF510343RO
124 Realty Company : DISTRICT RENT OFFICE
DOCKET NO. DC510077R
TENANT: Xiomara Rivera
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
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
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
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 . . . "
The Commissioner is of the opinion that this petition should be granted
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.
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
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
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