GD 410237 RO
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. GD 410237 RO
: DISTRICT RENT OFFICE
AMG Management Co., Inc., DOCKET NO. FH 410458-R
TENANT: Neil Cohen
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On April 28, 1992, the above-named petitioner-owner filed a Petition for
Administrative Review against an order issued on April 3, 1992, by the
Rent Administrator concerning the housing accommodations known as 244
East 79th Street, New York, New York, Apartment No. 1C, wherein the Rent
Administrator determined that the owner had overcharged the tenant.
The Administrative Appeal is being determined pursuant to the provisions
of Section 2526.1 of the Rent Stabilization Code.
The issue herein is whether the Rent Administrator's order was
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 by the filing in August, 1991
of a rent overcharge complaint by the tenant.
The tenant took occupancy pursuant to a lease commencing January 1, 1991
and expiring on December 31, 1991 at a monthly rental of $650.00.
In answer to the tenant's complaint, the owner alleged that following a
rent stabilized tenancy in 1984 at $350.00 per month, the apartment was
registered as "vacant/exempt" and that the super/maintenance man used
the apartment as an office/store room; that pursuant to DHCR advice, the
owner applied the "gapping" principle to compute the rent through 1991;
and that various renovations to the apartment totalling more than
$5,000.00 warranted a 1/40 rent increase. The owner submitted various
invoices and cancelled checks to document the alleged improvements.
GD 410237 RO
In response, the tenant contended that no improvements had been made,
but acknowledged that a new fireproof door had been installed.
In response to a DHCR Final Notice prior to imposition of treble
damages, the owner reasserted that it was entitiled to an increase for
improvements and upgrading, now stated to total more than $4000.00, and
that treble damages were not warranted.
By order dated April 3, 1992 the Rent Administrator established the
lawful stabilization rent as $410.08 effective January 1, 1991,
determined that the tenant had been overcharged and directed a refund to
the tenant of $8,637.12, including treble damages. In her calculations,
the Administrator deemed a two year lease for the superintendent for the
period from April 2, 1984 to March 31, 1986 and did not allow any
increases thereafter until the complainant's tenancy commencing in 1991.
In its Petition for Administrative Review, the owner contends, among
other things, that the apartment had been exempt, used as superintendent
living quarters and building office, and that "gapping" should have been
utilized by the Administrator; that treble damages were assessed before
the Administrator considered the owner's response to the final notice,
thereby depriving the owner of due process; that treble damages should
not have been assessed based on the owner's good faith belief that the
vacancy improvements submitted warranted a 1/40 rent increase; and that
those improvements merited the increase.
During the pendency of the PAR, the owner submitted a letter from the
tenant requesting that his original complaint be withdrawn with
prejudice; that the Administrator's order be vacated; and that an order
be issued granting the owner's PAR. The tenant's letter stated, among
other things, that he had entered into an agreement with the landlord in
Housing Court. In response to a Division request, the owner submitted
a photocopy of the Housing Court determination dated July 30, 1992.
The owner was afforded a final opportunity to present evidence
substantiating the alleged "exempt" status of the apartment from 1985
through 1990. In response, the owner resubmitted the documents
enumerated above and stated that the settlement was in accordance with
Section 2520.13 of the Rent Stabilization Code and that, accordingly,
the tenant's original complaint should be considered withdrawn and the
owner's PAR should be granted. The requested evidence regarding the
apartment's status was not provided.
The Commissioner is of the opinion that the owner's petition for
administrative review should be denied.
Section 2520.13 of the Rent Stabilization Code states, in pertinent
part, that a tenant may withdraw any complaint pending before the DHCR,
but that such settlement shall not be binding upon any subsequent
tenant. To the extent that the Stipulation of Settlement purports to
GD 410237 RO
settle arrearages, the Commissioner notes that this is a contractual
matter between the parties not within the purview of the Rent
Stabilization Law and Code, and not subject to the jurisdiction of the
DHCR. However, the stipulation will not be binding on future tenants.
Accordingly, the legal regulated rent established by the Administrator
in Docket No. ZFH410458R remains in full force and effect. The
Commissioner further notes that the tenant was not, as required by the
statute, represented by counsel.
The Commissioner finds that the argument of the owner that the apartment
was "exempt" is not supported by the evidence. DHCR registration
records filed by the owner during the period 1986 - 1990 indicate that
the subject apartment was vacant. The Administrator properly denied
allowing increases; the apartment wasn't "exempt," but vacant.
Therefore, the owner was not entitled to increases bridging the gap
Concerning the contention of the owner that vacancy improvements merited
a rent increase under Section 2522.4 of the Rent Stabilization Code, the
Commissioner is of the opinion that the Administrator correctly
determined that the work that was done to bring the apartment up to
living condition constituted ordinary maintenance and repairs, rather
than improvements. Consequently, no rent increase for this work was
The Commissioner notes that the Administrator failed to grant a rent
increase to the owner for the fireproof door. However, the
Administrator also erred in allowing a two-year lease for the
superintendent, absent documentation of a two-year period of occupancy
by the superintendent. The Commissioner finds that application of the
correct processing procedure would more than negate any benefit to the
owner based on the claimed improvement. In the absence of the filing of
a timely petition for administrative review by the tenant, this portion
of the owner's petition is denied.
Section 2526.1 of the Rent Stabilization Code provides, in pertinent
part, that any owner who is found by the DHCR to have collected a rent
or other consideration in excess of the legal regulated rent on and
after April 1, 1984 shall be ordered to pay to the tenant a penalty
equal to three times the amount of such excess. If the owner
establishes by a preponderance of the evidence that the overcharge was
not willful, the DHCR shall establish the penalty as the amount of the
overcharge plus interest from the date of the first overcharge on or
after April 1,1984.
With regard to the owner's contention that his reliance on a rent
increase based on vacancy improvements subsequently disapproved negates
the presumption of willfulness, the Commissioner finds that since a
substantial portion of the claimed improvements constitutes ordinary
maintenance and repairs, the owner's reliance on its providing a basis
for a rent increase is not reasonable, especially since the tenant
disputes that the work was ever performed. Accordingly, the penalty of
GD 410237 RO
treble damages is warranted.
With regard to the owner's assertion that its answer below was not
considered by the Administrator, and that it therefore was denied due
process, the Commissioner has examined the record of the proceeding
before the Administrator, and finds therein a careful, thorough analysis
of the answering documents received by the Division from the owner on
March 26, 1992. The Commissioner affirms the decision derived
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 that determined by this order plus any lawful
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 manner as a judgment or not
in excess of twenty percent per month thereof may be offset against any
rent thereafter due the owner.
THEREFORE, in accordance with the provisions of the Rent Stabilization
Law and Code, it is
ORDERED, that this petition for administrative review be, and the same
hereby is, denied, and, that the order of the Rent Administrator be, and
the same hereby is, affirmed. The amount of the rent overcharge through
December 31, 1991 is $8,637.12.
JOSEPH A. D'AGOSTA