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
APPEAL OF DOCKET NO.: GH 510193-RO
:
RENT ADMINISTRATOR'S
ARETI LOLIS, DOCKET NO.: ZEE-510203-R
PETITIONER :
------------------------------------X TENANT: ARGENTINA CABREJA
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW IN PART
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
part.
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
hereof.
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,
1993.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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