Adm. Rev. Docket No. FH810120RO
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                              JAMAICA, NEW YORK   11433

          APPEAL OF                            DOCKET NO.: FH810120RO
            LINCOLN ESTATES CO.,       
                                               DRO DOCKET NO.: DJ810001R
                                               TENANT: PHYLLIS A. NORMAN


          The above-named petitioner-landlord timely filed a Petition for 
          Administrative Review against an order issued on July 10,1991, by 
          the Rent Administrator at 55 Church Street, White Plains, New York, 
          concerning housing accommodations known as apartment 5R at 531 East 
          Lincoln Avenue, Mt. Vernon, New York, wherein the Administrator 
          established the stabilized rent and directed the owner to refund 
          $22,884.30, including interest from April 1, 1984.  

          The Commissioner has reviewed all of the evidence in the record and 
          has carefully considered that portion of the evidence relevant to 
          the issues raised in the administrative appeal.

          In essence there are two basic issues raised in this appeal. The 
          first issue is whether the petitioner's ability to defend itself 
          against the Complaint below was so hindered by forces beyond the 
          control of the petitioner as to warrant a remand of this matter to 
          the Administrator for re-processing. The second issue is whether 
          the Administrator's compliance with Section 2503.8 of the Tenant 
          Protection Regulations (the TPR) in the calculation of the 
          overcharge found constituted a violation of the petitioner's rights 
          to due process and/or equal protection and/or was arbitrary or 

          This proceeding was originally commenced on October 2, 1989, by the 
          filing of a Tenant's Complaint of Rent Overcharge and/or Excess 
          Security. In the Complaint, the tenant asserted that she believed 
          she was being overcharged based on conversations with her neighbor 
          tenants who had moved in at the same time she had, but were paying 
          a much lower rent. 

          In response to the Complaint, the landlord asserted that the 
          complaint was not timely as it had to have been filed within 90 

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          days of service on the tenant of her annual rent registration 

          In the appealed order, the Administrator determined that the rent 
          reserved under the prior tenant's next-to-last renewal lease 
          ($375.80) was the base rent for the calculation of the legal 
          regulated rent under the complaining tenant's vacancy lease. The 
          prior tenant having vacated prior to the expiration of the term of 
          her final, two year, lease. The Administrator increased the base 
          rent by the Guideline increase for a two year vacancy lease  
          beginning between October 1, 1985 and September 30, 1986 (10%) to 
          arrive at the maximum legal rent under the tenant's vacancy lease 
          ($413.38). The Administrator also found that the landlord had 
          failed to comply with 9NYCRR2503.8 (formerly known as Section 48 of 
          the Tenant Protection Regulations); and, therefore, that the 
          maximum rent the landlord could collect under the tenant's vacancy 
          lease and her two renewal leases (through June 30, 1991) was 

          In the Petition, the landlord, in substance, makes the following 
          arguments. The landlord claims that it mistakenly relied on the 
          view that the tenant's complaint was not timely filed and, 
          therefore, did not take the time and effort to check its records in 
          order to make any additional or different response to the 
          complaint. The landlord claims that it was not at fault in choosing 
          to make such an answer to the Complaint; and, therefore, the 
          Commissioner should now, on appeal, take cognizance of the 
          documentary evidence the landlord proffers to show that during the 
          vacancy just prior to the tenant's occupancy, the landlord expended 
          $13,172.94 to upgrade the apartment. The landlord argues that, were 
          it credited with the rent increase it claims based on these costs, 
          it would be seen that the landlord had in fact charged the tenant 
          less than the maximum rent to which it was legally entitled.

          The landlord further alleges that at the time the tenant took 
          occupancy, in October of 1985, the landlord was a partnership of 
          which the managing partner was Steve Stevens, who acted for the 
          partnership by preparing all leases and DHCR filings and by 
          managing the property. The landlord further states that due to the 
          managing partner's incompetence and mismanagement, the inactive 
          partners were forced, in 1987, to take legal action to compel him 
          to turn over the management of the property to them. The landlord 
          further claims that thereafter the formerly inactive partners have 
          properly managed the property. The landlord argues that were the 
          appealed order to be affirmed, the innocent, inactive partners, 
          will be punished for the incompetence and mismanagement of the 
          former managing partner while granting a windfall to the tenant. 
          The PAR also contains the following statement. "The owner failed to 
          submit proof of the legitimacy of the vacancy rent charged to these 
          complainants solely because it was led to believe, at the least in 
          part by DHCR personnel, that the tenants' complaint was 

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          jurisdictionally defective and that DHCR was required to dismiss 
          the same. Had the owner been better informed about the Regulations, 
          it would have easily been able to prove that the initial rent 
          charged to these complainants was in all respects lawful and 
          proper."  The landlord then proceeds with a description of the 
          alleged work and the documents annexed to the PAR as the landlord's 

          The landlord goes on to claim that the Administrator's enforcement 
          of Section 2503.8 of the Tenant Protection Regulations was 
          arbitrary and capricious, and denied the landlord both due process 
          and equal protection under the law. Nevertheless, the landlord 
          admits that it failed to comply with said Section. The landlord 
          also argues that inasmuch as it claims that the rent charged is 
          correct, the enforcement of Section 2503.8 is unduly burdensome in 
          this case.

          In summary, the landlord asks that the matter be remanded to the 
          Administrator so that the rent can be recomputed based on the 
          landlord's proofs.

          The tenant filed an answer opposing the Petition. In opposing the 
          Petition, the tenant asserts the following. On two prior occasions 
          she asked the landlord the details of how her rent was computed. In 
          October of 1988, the tenant went to Jeffrey Stillman's office to 
          advise him that her husband no longer resided in the apartment with 
          her and their infant daughter; to advise Mr. Stillman as to the 
          severity of her daughter's medical condition; and to inquire into 
          whether the rent she was being charged was the correct rent. The 
          tenant asserts that Mr. Stillman responded that the rent was the 
          correct rent, without giving the tenant any explanation as to how 
          it was calculated. The tenant then states that she thereupon signed 
          a copy of the lease renewal form which had never been returned to 
          her husband after he had signed it; and that when the tenant 
          requested that her name be added to the lease, Mr. Stillman 
          declined to do so. The tenant states that again, in April of 1989, 
          she asked Jeffrey Stillman if he was sure that the rent had been 
          properly calculated and that Mr. Stillman merely told the tenant 
          that she had to pay the rent or be evicted. 

          The tenant further states that she and her then fiance (now former 
          husband) had met with a Mr. Stevens to discuss their rental of an 
          apartment in the subject complex; and that Mr. Stevens represented 
          that there were three apartments available: 1R, a two bedroom 
          apartment with an eat-in kitchen located on the ground floor of 
          Building 4; 5R, which was almost identical to 1R with the exception 
          of wooden beams in the ceiling; and 1S, a one bedroom, ground floor 
          apartment. The tenant asserts that, from the time she took 
          occupancy, in October of 1985, there has never been a dishwasher in 
          the subject apartment. The tenant states that she has been advised 
          by the tenant in 1R that there is a dishwasher in 1R, which was 

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          installed prior to the time that that tenant took occupancy, in 
          October of 1985. 

          The tenant argues that none of the documents submitted by the 
          landlord to substantiate the alleged cost of the work on 5R contain 
          sufficient information, on their face, to qualify as substantiation 
          of a specific sum expended on the subject apartment other than the 
          invoice from the electrical contractor, Donald R. Deily, for 
          $362.34. The tenant states that only the Deily invoices indicate 
          that the work described on them was in whole or in part performed 
          in Apt. 5R. The tenant challenges the competence of the other Deily 
          invoice, the one for $226.89, as it clearly describes work done to 
          other parts of the complex in addition to work done in 5R, but 
          gives no breakdown of the respective costs. 

          As to all of the other documentation, the tenant charges that there 
          are no notations, whatsoever, on them that indicate that the work 
          was done in 5R.

          The tenant states that this is particularly noteworthy as to the 
          Lyn Collins invoice since the Collins invoice contains a 
          description of work one might expect to apply to 1R, but not 5R as 
          it speaks of providing extra hot water lines for a dishwasher and 
          5R has no dishwasher. 

          With her answer, the tenant submitted a statement from the former 
          superintendent of the subject complex, Manuel Irizarry. In that 
          statement, Mr. Irizarry states that he was the superintendent at 
          the time when work was being done in 5R and in said capacity, he 
          was responsible for overseeing the work. Mr. Irizarry goes on to 
          state that light fixtures, were installed in both the kitchen and 
          the bathroom; repairs were made to the walls as well tiles being 
          installed on half-walls. Mr. Irizarry further states that a 
          dishwasher was never installed, nor were new hot water lines for 
          the same  installed in 5R. Mr. Irizarry also states that said work 
          was performed in 1R and that both 1R and 5R were worked on at the 
          same time and charges were often submitted on the entire project 
          and not broken down into separate billings for each apartment.

          The tenant asserts that she consulted with the owner of Apollo 
          Lighting,  Lou. The tenant states that Lou told her that the cost 
          of the two fluorescent lighting fixtures installed in her kitchen 
          was $30.00 each, bulbs included, and that upon showing Lou a 
          picture of the incandescent bulb light fixture in her bathroom, Lou 
          told the tenant that it could not have been purchased from Apollo 
          Lighting as Apollo deals only in fluorescent fixtures. Therefore, 
          the tenant challenges the probative value of the landlord's 
          cancelled check payable to Apollo for $633.91, bearing no notation 
          other than "fixtures" on the issue of the cost of anything 
          installed in the tenant's apartment.

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          The tenant asks that the order below be modified to provide for the 
          imposition of treble damages.

          Although afforded the opportunity to do so, the landlord filed no 
          reply to the tenant's answer.

          The Commissioner is of the opinion that this Petition should be 

          In essence, what the petitioner seeks is another chance to defend 
          itself against the Complaint. The petitioner argues that it should 
          be given this relief because it made a mistake in its defense below 
          and it can prove that the rent charged the tenant (putting aside, 
          for the moment, its noncompliance with TPR Section 2503.8) was the 
          correct rent. The Commissioner finds that a party may not seek to 
          relitigate a matter simply because it mounted a defense based on 
          faulty legal research and a tactical blunder.

          The Commissioner finds this to be so whether the landlord was told 
          by DHCR staff members that the Complaint was untimely or not. 
          Putting aside the fact that there are no specifics in the Petition 
          about when and from whom this misinformation was allegedly 
          obtained, let alone proof that such  conversation(s) took place, 
          the Commissioner notes that it is well settled that reliance on 
          informal information from a government agency is not a grounds for 
          estopping said agency from the proper administration of the 
          applicable law and regulations. This is so for the average person 
          and it is all the more so for business people who have chosen to 
          engage in commerce in a regulated industry. 

          The Commissioner finds that the partners who are now operating the 
          subject complex, which contains over 130 residential units and 
          which they have taken through a co-op conversion, may not be 
          excused from relying on conversations with employees of a 
          government agency as their legal research. Further, the 
          Commissioner finds that the petitioner's error in relying on this 
          'research' was compounded by the petitioner's tactical mistake of 
          hanging its entire defense on one narrow, technical grounds. The 
          Commissioner notes that the petitioner does not claim that anyone 
          advised it to defend itself on this one ground; but, in effect, the 
          petitioner argues that it was reasonable for it not to take the 
          time and trouble to check its records, so that it could defend on 
          the merits, because it had this sort of research to rely on. 

          The Commissioner therefore finds that the petitioner has offered no 
          valid excuse for its failure to submit below the proofs which it 
          offers for the first time on appeal. The Commissioner therefore 
          finds that said proofs are beyond the scope of review on this 
          appeal and there is, then, no support for the contention that the 

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          landlord was entitled to collect the rent set forth in the tenant's 
          vacancy lease.

          Moreover, the Commissioner finds that if the petitioner-landlord 
          were permitted to attempt to prove its claim on the basis of the 
          documentary evidence submitted with the Petition, the landlord 
          would not be able to substantiate any portion of the alleged 
          $13,172.94 in costs as the basis for the rent increase it claims it 
          was entitled to.

          The Commissioner finds that the tenant's comments about the Lyn 
          Collins invoice, which accounts for $10,900.00 of the alleged 
          costs, are well taken. The Commissioner finds that the description 
          of the work itself indicates that this invoice was not for work 
          done in 5R. The Commissioner further finds that the absence of any 
          notation on the invoice indicating which apartment was worked on 
          renders this document useless as substantiation of the claimed 

          The Commissioner also finds that that same defect, the absence of 
          any indication in the document itself as to what apartment was 
          worked on, is found in all of the other documents submitted except 
          for the Deily invoices. Indeed, the Commissioner finds that most of 
          the other documentation offered consists mainly of copies of 
          purported journal entries, bank statements and cancelled checks 
          which contain neither a description of what the payments were for 
          nor a notation as to the apartment for which they were expended. 
          They merely indicate payments of a certain amount of money to a 
          certain payee. The Commissioner therefore finds that, with the 
          exception of the two Deily invoices, the documentation submitted on 
          appeal is wholly inadequate to prove a connection between the 
          expenditures they purport to represent and the subject apartment. 
          That being the case, the Commissioner finds that said documentation 
          provides no substantiation of the rent increase with which the 
          landlord claims it should be credited.

          As to the Deily invoices (the only ones that bear an apartment 
          designation and something of a description of the work done) the 
          Commissioner finds that in the invoice for $226.89, the work 
          described includes work that clearly had nothing to do with 
          apartment 5R and there is no allocation of the total cost stated as 
          between the work done in 5R and the work done elsewhere. Further, 
          the Commissioner finds that the description of the work in each of 
          the Deily the invoices is inadequate to prove that the work 
          performed was the type of work for which a landlord may claim a 
          rent increase under TPR Section 2502.4. The work described in the 
          invoice for $226.89 is "Work in apt 5R in kitchen. Put up 4 new 
          outside lites in front entrances. Put new lite in rear garage door. 
          Put garage lites on auto cells." In the Deily invoice for $362.34, 
          the work performed is described as follows, "Rewire & install new 
          fixtures & outlets in Apt 5R Lincoln Estates." The Commissioner 

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          notes that to qualify for a rent increase such as the one claimed 
          herein (that is, based on "an increase in the services, furniture, 
          furnishings or equipment provided" [9NYCRR2502.4(a)(2)(i)] ), mere 
          repairs, maintenance or the replacement of pre-existing equipment 
          will not suffice. The Commissioner finds that there is nothing in 
          the Deily invoices that shows that the work done was anything other 
          than normal repairs, maintenance or the replacement of pre-existing 

          The Commissioner also finds that much of the work the landlord 
          claims to have done in the subject apartment, such as the 
          replacement of a toilet bowl, repairs to plaster walls and retiling 
          half walls are merely ordinary repairs and maintenance; and not the 
          type of work for which a landlord can claim a rent increase under 
          Section 2502.4.

          Therefore, the Commissioner finds that even if the landlord were 
          offered a second chance to respond to the overcharge complaint and 
          to submit the documents offered on appeal to prove its entitlement 
          to the subject rent increase, the landlord would not be able to  
          meet its burden of proof.  

          As to the landlord's arguments against the Administrator's 
          enforcement of what used to be known as Section 48 and is now 
          designated Section 2503.8, the Commissioner finds that that 
          enforcement is not a matter of discretion. The Section reads as 

                         (a) A landlord of a vacant housing accommodation for 
               lease shall make available to prospective tenants a 
               notice in writing of the monthly rent under the offered 
               lease, and of the prior legal regulated rent, if any, 
               which was in effect immediately prior to the vacancy, and 
               that any increase in the prior legal regulated rent under 
               the offered lease does not exceed the applicable rate of 
               rent adjustment in effect pursuant to the guidelines 
               filed with the division by the Rent Guidelines Board for 
               the county wherein the housing accommodation is located, 
               or as otherwise authorized by the act.
                    (b) At the time of renting the vacant housing 
               accommodation, the landlord shall attach this notice in 
               writing to the executed written lease, and deliver a copy 
               of the notice to the tenant with a copy of the lease, or 
               include a written provision in the lease setting forth 
               the prior legal regulated rent, the amount of any rent 
               increase under the lease and showing that such increase 
               does not exceed the applicable rate of rent adjustment in 
               effect pursuant to the guidelines filed by the Rent 
               Guidelines Board or as otherwise authorized by the act. 
               In the event the landlord does not comply with this 
               requirement, the lease shall not be effective to increase 

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               the prior legal regulated rent; however, at such time 
               thereafter that the landlord does provide the notice to 
               the tenant with the required information in writing, the 
               otherwise authorized monthly rent increase shall be 
               collectible commencing with the first rent payment date 
               thereafter. [emphasis supplied]

          The Commissioner notes that the landlord has admitted to failing to 
          comply with this Section. Further, the Commissioner notes that, 
          contrary to the petitioner-landlord's assertion that the tenant 
          never inquired into how the rent was calculated, the tenant asserts 
          that, in 1988 and, again, in 1989, the tenant went to the managing 
          agent for the newly active partners and asked that the rent 
          calculation be checked; and that the tenant's request was denied. 
          The Commissioner further notes that the formerly inactive partners 
          who have managed the complex since 1987, have not disavowed the 
          rent originally imposed by the former managing partner. Instead, 
          they have continued the petitioner's failure to comply with Section 
          2503.8 and have defended the rent, as originally set, without 
          having expended the "time and effort required to locate all of the 
          old records necessary to establish the legitimacy of the tenants' 

          1 The Commissioner finds a basic inconsistency between the 
          landlord's implicit faith in the correctness of the tenant's rent, 
          as calculated by the former managing partner, and the landlord's 
          attempt to raise some sort of equitable defense based on the 
          alleged incompetence and mismanagement of the former managing 
          partner. Moreover, the Commissioner notes that the Petition does 
          not specify any particular instance of the former managing 
          partner's alleged incompetence or mismanagement which the current 
          partners seek to disavow and/or by which they claim to have been 
          prejudiced. Nevertheless, the Commissioner notes that it is well 

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initial rent." (page 2 of the addendum to the Petition)1
          The Commissioner notes that Section 2503.8 directs that if the 
          landlord fails to give the required notice, the vacancy "lease 
          shall not be effective to increase the prior legal regulated rent 
          [emphasis supplied]". The Commissioner finds that once the 
          Administrator knew that the landlord had not complied with Section 
          2503.8, it was not a matter of discretion for the Administrator to 
          determine whether he was going to calculate the overcharge in a 
          manner that complied with Section 2503.8. The Administrator must 
          apply the applicable regulations in making his determinations.  

          The Commissioner finds that the landlord's claims of denial of due 
          process and equal protection based on the enforcement of Section   
          2503.8 are spurious. That Section contains no hyper-technical 
          requirements. Like many other regulations designed to protect 
          consumers it merely sets forth a common sense disclosure 
          requirement. All that Section 2503.8 requires is that a landlord be 
          open and honest with new tenants; telling them at the outset what 
          it is that the landlord believes it is entitled to in rent. If a 
          landlord does this and the tenant has any problem with the 
          landlord's calculations, the whole thing can be worked out between 
          them either before the tenant moves in or shortly thereafter. If 
          the differences cannot be resolved, the parties can part company or 
          seek a resolution of their dispute long before the dispute has 
          escalated. The freezing of the rent that is triggered by a 
          landlord's failure to comply with this Section is a reasonable 
          inducement to compliance as soon as possible, so that a 
          disagreement over a modest sum of money does not grow into a 
          disagreement over a substantial sum of money long before the tenant 
          even knows that there may be something unusual about the way the 
          rent was calculated; as soon as there is compliance, the freeze is 
          lifted. The Commissioner finds that the landlord's characterization 
          of this Section as an arcane technicality barbed with a penalty for 
          the unwary does not conform to the reality of the situation.

          The Commissioner further notes that the petitioner-landlord's 
          arguments concerning Section 2503.8 rest heavily on the supposition 
          that there was no overcharge save that generated by 2503.8. That is 
          not the case. The prior tenant's last lease renewal was for a rent 
          of $387.07. The complaining tenant's vacancy lease had a rent of 
          $687.31. Absent the landlord's being able to prove its entitlement 
          to a higher rent, the most the landlord could have charged the 
          tenant (Section 2503.8 aside) under the vacancy lease was $413.38. 
          Further, after the expiration of the tenant's vacancy lease, the 
          tenant entered into two, two year renewal leases. Under those 
          leases the tenant was charged a rent of $721.67 per month and 

          settled that a partner is, generally, bound by the actions of his 
          or her co-partners in the conduct of their common enterprise. 
          Therefore, if anyone is to be prejudiced by the act or omission of 
          a member of a partnership the law requires that it be his or her 

          Adm. Rev. Docket No. FH810120RO

          $757.75 per month, respectively. Upon each of those renewal leases, 
          the landlord was entitled to no more than a 5% increase over the 
          prior legal rent. Therefore, even without the implementation of 
          Section 2503.8, the landlord has been found to have overcharged the 
          tenant by $273.93 per month for twenty-four months under the 
          vacancy lease, by $287.62 per month for twenty-four months under 
          the first renewal lease and by $302.00 per month for at least 
          eighteen months under the second renewal lease. That represents a 
          total of $18,913.20 in overcharges, without interest. Thus, as 
          applied in the appealed order, the provisions of Section 2503.8 
          account for an additional overcharge of only $2,114.89, plus 

          The Commissioner further notes here that the Administrator did err 
          in the appealed order. A correct implementation of Section 2503.8's 
          mandate would have frozen the rent at the legal regulated rent 
          under the prior tenant's lease. In the appealed order, the 
          Administrator froze the rent through June 30, 1991 by adding a 10% 
          guideline increase to the base rent for calculating the tenant's 
          vacancy lease rent. Therefore, in the appealed order, the maximum 
          collectible rent was fixed at a higher figure than it should have 
          been and the overcharge to be refunded was fixed at a lower figure 
          than it should have been. However, in the absence of an appeal 
          taken by the tenant, the Commissioner finds that that error may not 
          be corrected in this Order and Opinion as it has not been raised in 
          a Petition filed against the Administrator's order; and it is 
          therefore beyond the scope of review on this appeal.

          Likewise, the tenant's request that treble damages be imposed 
          cannot be taken cognizance of on this appeal as the tenant did not 
          file a Petition for Administrative Review against the order below. 

          In hereby affirming the order below, the Commissioner has 
          determined in this Order and Opinion that the landlord collected 
          overcharges of $22,884.30, including interest from April 1, 1984, 
          and that as of the issuance date of the Administrator's order, July 
          10, 1991, the landlord became liable to the tenant for the 
          repayment of said sum.  

          This Order and Opinion may, upon the 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 overcharge may be offset against any rent thereafter due the 
          owner. Where the tenant credits the overcharge, the tenant may add 
          to the overcharge, or where the tenant files this Order and Opinion 
          as a judgment, the County Clerk may add to the overcharge, interest 
          at the rate payable on a judgment pursuant to section 5004 of the 
          Civil Practice Law and Rules from the issuance date of the Rent 
          Administrator's Order to the issuance date of the Commissioner's 
          Order and Opinion.

               Adm. Rev. Docket No. FH810120RO

               THEREFORE, pursuant to all of the applicable statutes and 
               regulations, it is

               ORDERED, that this Petition be, and the same hereby is denied; and 
               that the Administrator's order be and the same hereby is affirmed.


                                               JOSEPH A. D'AGOSTA
                                               Deputy Commissioner



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