FJ 410303 RT; FJ 410210 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 REVIEW
APPEALS OF DOCKET NOS.: FJ 410303 RT;
FJ 410210 RO
Florence and Rosalind Cohen
and DRO DOCKET NO.: CA 410440 R
Jonathan Woodner Company,
PETITIONER
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ORDER AND OPINION DENYING OWNER'S PETITION
AND
GRANTING IN PART TENANT'S PETITION
On October 15, 1991 and on October 16, 1991, the above-named
petitioners filed Petitions for Administrative Review against an
order issued on September 11, 1991 by the Rent Administrator, 92-31
Union Hall Street, Jamaica, New York concerning the housing
accommodations known as 888 Eighth Avenue, Apartment 12D, New York,
New York, wherein the Rent Administrator determined that the
tenants had been overcharged. These petitions have been
consolidated for purposes of review since they concern similar
issues and are based upon the same set of facts.
Subsequent thereto, the petitioner-tenants 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. This proceeding was then
remitted, by a court order, to the Division for a determination of
the petition's appeal.
The issue herein is whether the Rent Administrator's order was
warranted.
The Commissioner has reviewed all of the evidence in the record and
has carefully considered that portion of the record relevant to the
issues raised by the administrative appeals.
This proceeding was originally commenced by the filing of a rent
overcharge complaint by the tenants on January 28, 1988. In such
FJ 410303 RT; FJ 410210 RO
complaint, the tenants stated that they had not been provided with
a copy of the apartment registration form (RR-1 form).
In response to the tenants' complaint, the owner submitted a rent
history and, submitting invoices in the amount of $13,023.00 and
cancelled checks as proof, stated that improvements at a cost of
$22,325.00 had been performed during a vacancy period.
In reply, the tenants disputed whether the claimed improvements had
been made, or if the work had been done, whether it qualified as
improvements rather than repairs or maintenance, and questioned the
probative value of the documents submitted by the owner.
The owner was also directed to submit proof of service of the RR-1
form on the tenant in occupancy on the date of the initial rent
registration statement. In a response dated May 14, 1989, the
owner submitted an affidavit from the superintendent that he had
personally hand delivered the 1984 apartment registrations to all
occupied apartments on July 15, 1984 and submitted a copy of the
RR-1 form listing the April 1, 1984 rent of the subject apartment
as $474.34.
On July 26, 1991, a staff member of the Division of Housing and
Community Renewal (DHCR) conducted an inspection of the subject
premises and determined that:
1) there were five kitchen cabinets;
2) there were three Kenmore appliances: a
refrigerator, a dishwasher and a range;
3) it was not possible to ascertain the
installation date of the floors and doors;
4) there was a formica sink top, not marble.
On September 11, 1991, the Administrator issued the order here
under review wherein the Administrator determined that the owner
had registered the April 1, 1984 rent for the subject apartment,
that the owner had served the tenant then in occupancy with a copy
of the registration form as required, and that the April 1, 1984
Initial Legal Registered Rent was $474.34. The Administrator
allowed $12,774 for improvements made as of November 1, 1987 but
found nevertheless, an overcharge of $54,078.08, inclusive of
excess security and treble damages.
In their appeal, the tenants request that the Administrator's order
be modified and contend that:
1) the 1984 registration was not properly filed
and served on the tenant in occupancy and that
the owner should therefore be barred from
increasing the rent above $474.34;
FJ 410303 RT; FJ 410210 RO
2) because the owner did not submit proper
documentation to confirm costs of alleged
improvements, and because the evidence does
not substantiate that the improvements either
were done or qualify under Code Section
2522.4, the owner should be barred from
collecting rent increases based upon these
improvements; and, to the extent that Code
Sections 2522.4 (c)(g)(4) and (5) permit an
owner to unilaterally secure a rent increase
without applying for DHCR approval, they
should be deemed null and void.
In response and in its own appeal, the owner contends that it
should be credited with a greater amount for improvements than was
allowed. The owner challenges the Administrator's order on the
following grounds:
1) there appears to be an erroneous calculation
which permitted only $12,774.18 instead of
$13,044.59 in costs as was proved by the
submitted invoices;
2) the order does not credit the owner with
$4,780.18 for costs of labor performed by a
preparation crew hired by the owner
specifically for the work done in the subject
apartment;
3) treble damages are inappropriate as the owner
proved there was no willful overcharge.
In response to the tenants' claim that the Code Section which
permits unilateral rent increases by an owner should be declared
null and void, the owner states that the Civil Court decision cited
by the tenants is not binding and need not be addressed.
In answer to the owner's petition, the tenants contend that:
1) the owner's petition should be dismissed as
untimely;
2) the owner should not be permitted to
supplement its claim and to introduce new
evidence on appeal;
3) the evidence previously submitted did not
substantiate the alleged improvements;
4) where the record supports a finding of willful
overcharge and the owner has not proved non-
willfulness, treble damages are warranted.
FJ 410303 RT; FJ 410210 RO
The Commissioner is of the opinion that the owner's appeal should
be denied and that the tenants' appeal should be granted in part.
Code Section 2529.2 requires that a Petition for Administrative
Review (PAR) be filed within thirty-five days after the date an
Administrator's order is issued. A PAR postmarked not more than
thirty-five days after the issuance date of such orders, as in the
instant case, is deemed timely filed. Accordingly, the
Commissioner finds that the owner's PAR was timely filed.
The Rent Stabilization Law and Code require owners to file an
initial registration for each rent stabilized housing accommodation
and to thereafter file annual updates with the DHCR. Owners must
serve copies of the registrations on the tenant in occupancy to
properly complete registration.
Review of the record reveals that the owner filed the initial legal
registration for April 1, 1984, with the DHCR, registering an
initial legal rent of $474.34, but failed to submit the required
proof of service on the tenant then in occupancy. Pursuant to Code
Section 2528.2, it was required that the matter be processed as a
timely challenge to the Initial Rent Registration. Section
2526.1(a)(3)(ii) requires that where a tenant files a timely
challenge to the Initial Rent Registration, the lawful rent be
established on the basis of the rental history from April 1, 1980.
The owner herein submitted a complete rental history from April 1,
1980 which confirmed the Initial Registered Rent. Hence, the
Administrator did not err in accepting $474.34 as the Initial Legal
Registered Rent.
However, pursuant to Section 2528.4 of the Code, until such time as
registration is properly completed, if no initial registration has
taken place, the owner is barred from collecting any rent in excess
of the legal regulated rent on the date the housing accommodation
became subject to registration requirements.
Pursuant to Policy Statement 92-3, the only acceptable proof of
service on the tenant of an initial registration filed prior to May
1, 1987 is: a contemporaneously signed receipt from the tenant
acknowledging hand delivery of the initial registration form; or a
post office receipt certifying the date and the number of pieces of
mail to the building included in the "Carrier Route Pre-Sort"
service along with a list of the mailing addresses furnished by the
RSA or by a bonded mailing house; or a signed and dated form
#PO3877, "Acceptance of Registered Insured, C.O.D., and Certified
Mail," which proves the date of delivery of first class mail to the
Post Office.
During the course of processing these appeals, the Commissioner
notified the owner that a superintendent's affidavit was not
sufficient proof of service of the initial registration on the
FJ 410303 RT; FJ 410210 RO
tenant then in occupancy; although afforded the opportunity to
submit an acceptable form of proof of service, the owner failed to
do so. Accordingly, pursuant to Code Section 2528.4, the owner is
barred from collecting any rent above $474.34 until such time as
the owner proves that service of the initial registration has been
effected. The owner's entitlement to rent increases for Major
Capital Improvements (MCI), individual improvements pursuant to
Code Section 2522.4(a)(1), and rent guideline increases upon lease
renewals are prospective and can be collected only after the
initial registration requirements have been met.
With respect to the owner's claim for labor costs and the
submission of employee records, the Commissioner finds this portion
of the owner's appeal is outside the scope of review. Code Section
2529.6 limits review to facts or evidence which were before the
Administrator. The instant matter was not raised for consideration
by the Administrator but is submitted for the first time on appeal.
Accordingly, this portion of the owner's appeal is denied.
Section 2522.4(a)(1) provides that where there has been a
substantial increase of dwelling space or an increased in the
services, or installation of new equipment or improvements, the
monthly stabilization rent for said unit may be increased by 1/40th
the cost provided the tenant then in occupancy has consented
thereto in writing. In addition, improvements made during a
vacancy may be collected without the new tenant's consent to pay
such increase. Because the Code permits an owner to make such
improvements and based thereon to collect a rent increase without
either tenant consent or DHCR approval, it is incumbent upon an
owner to maintain and preserve such documentary evidence which will
substantiate the rent increase in case of tenant challenge. It has
long been the policy of the DHCR upon such challenge to require an
owner to confirm claimed costs of any claimed improvement with
adequate documentation in the form of cancelled checks and
apartment specific invoices.
In view of the conflicting claims of the owner and the tenant, the
Commissioner has re-examined all of the evidence pertinent to the
issue of improvements. The Commissioner finds that the
Administrator should have disallowed $524.04 (insufficient proof)
claimed by the owner for improvements made during a vacancy period
in 1984. The following items for which the owner submitted
adequate documentation qualify as improvements: venetian blinds -
$423.26; dishwasher, refrigerator and range - $1,288.12; kitchen
cabinets - $446.00 and $2,169.99; a total of $4,327.37. The amount
of $611.61 for a cultured marble top sink is disallowed since the
inspector found a formica counter - top.
After careful consideration, the Commissioner permits an increase
for parquet flooring - $5,332.29 but disallows for purpose of rent
increase the remainder of the amount approved by the Administrator:
FJ 410303 RT; FJ 410210 RO
1) the following items are considered to be items
of ordinary, normal repairs or maintenance and
do not qualify as improvements: - weatherstrip
- $11.91, assorted hardware - $47.92, $29.01,
ballast -$18.88, lock - $6.50, toilet seat -
$5.90, ballcock -$22.19, knob - $19.93, wall
plates and electric receptacles - $128.61 -
total $290.85;
2) linoleum floors are not considered
improvements - kitchen linoleum - $217.45;
3) the invoices submitted in support of the
following items lacked an apartment
designation and are disallowed on that basis:
light fixtures - $157.23, $157.29, doors -
$253.63, $66.03, $263.05, shower doors -
$292.28, toilet, shower faucet, faucet, tooth
brush holder, soap holders - $579.03 - Total
$1,768.54.
Accordingly, the Commissioner finds that only $9,659.66 or $241.49
per month should be approved for a rent increase prospectively.
The Rent Stabilization Law provides for a penalty of treble damages
for willful overcharges. The statute creates a presumption of
willfulness subject to rebuttal by the owner showing non-
willfulness by a preponderance of the evidence. Review of the
record reveals that the owner herein initially alleged that it had
spent $22,325.00 for improvements but submitted invoices totalling
only $13,023.00 as proof. Further the owner failed to submit proof
of service of the initial registration on the tenant then in
occupancy although given an opportunity to do so. The Commissioner
notes that even if every claimed improvement had been approved,
there would have remained a substantial overcharge. The
Commissioner finds that the owner failed to meet its burden and
that treble damages were warranted in the instant case.
In view of the owner's failure to properly register the subject
apartment, (prove service of the initial registration on the tenant
then in occupancy), the Commissioner has recomputed the legal
stabilization rent and the overcharge collected by the owner in the
rent calculation chart attached hereto and fully made a part of
this order. The legal stabilization rent is frozen at $474.34.
The owner is directed to roll back the rent and to refund
$129,166.68, inclusive of excess security and treble damages.
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 in the same
FJ 410303 RT; FJ 410210 RO
manner as a judgment or not in excess of twenty percent per month
may be offset against any rent thereafter due the owner.
THEREFORE, in accordance with the Rent Stabilization Law and Code,
it is
ORDERED, that the owner's petition be, and the same hereby is,
denied, that the tenants' 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.
ISSUED:
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JOSEPH A. D'AGOSTA
Deputy Commissioner
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