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

      APPEAL OF                              DOCKET NO.: GH 510193-RO
                                             RENT ADMINISTRATOR'S
          ARETI LOLIS,                       DOCKET NO.: ZEE-510203-R
                            PETITIONER    : 
      ------------------------------------X  TENANT: ARGENTINA CABREJA  


      On April 22, 1992 the above-named petitioner-owner filed a Petition for 
      Administrative Review against an order issued on March 18, 1992 by the Rent 
      Administrator, 92-31 Union Hall Street, Jamaica, New York concerning the 
      housing accommodations known as 568 West 192nd Street, New York, New 
      York,Apartment No. 43 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 warranted.

      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 May, 1990 of a 
      rent overcharge complaint by the tenant, who stated in substance that she 
      had commenced occupancy pursuant to a lease commencing April 1, 1989 
      [actually March 1, 1989] at a rent of $460.66, and that the owner had just 
      begun charging a $16.88 permanent and $20.04 temporary increase each month 
      for new windows, even though she was not living in the apartment on the 
      effective date of the increase and did not sign any paper saying she was 
      responsible for the charges.

      In answer to the complaint, the owner stated in substance that the tenant's 
      lease binds her to rent increases set by the DHCR.

      In an order issued on March 18, 1992 the Rent Administrator determined that 
      the tenant had been overcharged in the amount of $4,459.36, including 
      treble damages, as of March 31, 1992, and directed the owner to refund such 
      overcharge to the tenant as well as to reduce the rent.

      In this petition, and a supplement, the owner contends in substance that 
      the Rent Administrator's order failed to take into account the installation 
      of new kitchen cabinets as well as a renewal lease of the prior tenant, and 
      that any overcharge was the result of compounding two Guideline increases 
      during the same Guidelines period, and not willful.


          ADMIN. REVIEW DOCKET NO.: GH 510193-RO

      In answer, the tenant asserts in substance that the owner's petition was 
      untimely; that the proper increase for the lease commencing November 10, 
      1988 was 7% rather than 9%, that the $19.97 increase for new kitchen 
      cabinets and new refrigerator was already included in the 9% increase; that 
      "there was not a refrigerator in my apartment when I planned to move, 
      because the refrigerator in the apartment belonged to Mrs. Fernandez (the 
      prior tenant); and that she has not paid the retroactive increase beginning 
      July, 1987 because she was not a tenant until March, 1989.

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

      In the proceeding before the Administrator the owner submitted a February 
      15, 1989 invoice from Castro Heights Supply Co. for $292.28 for two 
      insulated wall units, a monthly statement from that company listing six 
      purchases during February totalling $520.38, and a cancelled check dated 
      March 12, 1989 for $520.83.  The Commissioner considers this, constituting 
      an invoice and proof of payment, to warrant a rent increase for the 
      installation of new equipment, particularly since the tenant has not denied 
      the installation of new kitchen cabinets.

      The tenant is incorrect in asserting that the costs of the new refrigerator 
      and new cabinets are included in the 9% Guidelines increase.  Section 
      2522.4(a) of the Rent Stabilization Code provides for an additional 
      increase where there has been an installation of new equipment or 
      improvements.  The owner is therefore entitled to an increase of $19.19 
      (1/40th of the $767.50 cost of the new refrigerator and new kitchen 
      cabinets).  The tenant's contention that no new refrigerator was installed 
      can not be considered in this appeal proceeding, since the tenant did not 
      file her own Petition for Administrative Review against the Administrator's 
      order allowing a rent increase for one.  

      While the owner is correct that the Administrator's order did not account 
      for the prior tenant's lease commencing November 10, 1988, even though that 
      lease was contained in the record, that has no practical effect.  Both that 
      lease and the complainant's vacancy lease commenced during Guidelines 
      period 20.  The complainant's rent was based on the rent in effect on 
      September 30, 1988, so the fact that another lease had commenced on 
      November 10, 1988 did not affect her rent.  Guideline 20 provided for a 
      Guideline increase of 9% (not 7% as contended by the tenant) and a vacancy 
      allowance of 12%.

      On April 5, 1990 an order was issued in Docket No. BH-430057-OM, granting 
      a Major Capital Improvement ("M.C.I.") increase of $4.22 per room, 
      effective January 1, 1988, for new windows.  Because the rent increase took 
      effect 28 months before the first rent payment date following the date the
      order authorizing the increase was issued, the order calculated 28 months 
      of arrears at $4.22 per room, for total arrears of $118.76 per room, which
      represents $475.04 arrears for 4-room apartment.  Paragraph A-2 on page 3 
      of that order, concerning the conditions for charging the increase 
      resulting from the order, stated that :


          ADMIN. REVIEW DOCKET NO.: GH 510193-RO

           For the increase granted by this Order to be collectible during 
           the term of the current lease; a) the lease must contain a 
           provision authorizing the collection of an increase pursuant to 
           a DHCR Order; and b) where the application for this increase was 
           pending prior to the commencement date of a vacancy lease, the 
           increase granted in this Order is collectible only if such lease 
           contains a specific provision regarding the application pending 
           before the Division of Housing and Community Renewal, the basis 
           for the application and that any increase granted pursuant to a 
           DHCR Order would be effective during the term of the lease.  

           [Emphasis added, except for "vacancy lease".]

      Applying the aforementioned M.C.I. order to the instant rent overcharge 
      proceeding, in order for the owner to collect any M.C.I. rent increase at 
      all for the complainant's vacancy lease, she was required to include a 
      provision in that lease specifically mentioning that an application was 
      pending with the DHCR for a rent increase based on the installation of new 
      windows, and that any increase granted pursuant to a DHCR order regarding 
      that application would be effective during the term of the lease.  The 
      general provisions in the lease and the rent stabilization rider regarding 
      M.C.I.'s, and rent adjustments based on DHCR and Rent Guidelines Board 
      orders, are not the sort of specific notification of a pending rent 
      increase required by Paragraph A-2.  Because the owner applied for the rent 
      increase on August 11, 1987, yet did not mention the pending application in 
      Docket No. BH-430057-OM for a rent increase in the tenant's vacancy lease, 
      she may therefore not collect any rent increase based on that order during 
      the term of the complainant's vacancy lease.  There are of course no 
      arrears due, since there would be no period prior to the commencement of 
      her renewal lease on March 1, 1991 during which the tenant was liable for 
      but did not pay an increase based on that order.

      The same is true in part of the M.C.I. increase for Docket No. CJ-510034- 
      OM, which was also pending when the complainant commenced her vacancy 
      lease, which did not mention it; although the order was effective April 1, 
      1989, no increase may be charged based on it until March 1, 1991.  No 
      arrears are warranted because the owner has now been credited in the lawful 
      stabilization rent with the MCI increase effective March 1, 1991.

      Taking these factors into account, the Commissioner has recalculated the 
      lawful stabilization rents and the amount of overcharge.  They are set 
      forth on an amended rent calculation chart attached hereto and made a part 

      Section 2526.1(a)(1) of the Rent Stabilization Code generally establishes 
      a rebuttable presumption that any overcharge is willful, so treble damages 
      are imposed unless an owner establishes that the overcharge was not 
      willful.  While an owner's charging of an increase for an M.C.I., despite 
      not having met the vacancy lease notification requirements to charge it 
      during a vacancy lease, might normally not avoid treble damages, in the 


          ADMIN. REVIEW DOCKET NO.: GH 510193-RO

      present case the preponderance of the overcharge was due to the 
      compounding, or "piggbacking", of two Guidelines allowances during the same 
      Guidelines period.  While such compounding is not allowed, Policy Statement 
      89-2 and DHCR orders recognize this as a hypertechnical computation error, 
      not warranting treble damages unless the owner continues making the error 
      after the DHCR has issued an order correcting such owner's error.  While 
      the balance of the overcharge was due to the collection of 28 months of 
      arrears, the fact that most of the overcharge was due to an excusable error 
      warrants a finding that the overcharge was not willful.  Therefore 
      interest, rather than treble damages, has been imposed on the overcharge.

      Regarding the tenant's contention that the owner's appeal was not timely:  
      While the owner submitted another copy of her appeal in July, 1992, since 
      the DHCR had misplaced the original copy, such original copy of the appeal 
      has since been located, along with the envelope it was mailed in.  The 
      envelope has a United States Postal Service postmark of April 22, 1992, so 
      the appeal was timely.

      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 by the tenant in the same manner as a judgment 
      or not in excess of twenty percent thereof may be offset each month against 
      any rent thereafter due the owner.

      If the owner has already complied with the Rent Administrator's order and 
      there are arrears to the owner as a result of the present 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 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 increases.

      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, 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.  


          ADMIN. REVIEW DOCKET NO.: GH 510193-RO

      The lawful stabilization rents and the amount of the rent overcharge are 
      established on the attached chart, which is fully made a part of this 
      order.  The amount of the rent overcharge through March 31, 1992 is 
      $2,181.84, including excess security of $47.53.  The lawful stabilization 
      rent is $483.48 per month in the lease from March 1, 1991 to February 28, 


                                           JOSEPH A. D'AGOSTA
                                           Deputy Commissioner



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