GD 410152 RT; GD 410153 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 APPEAL
APPEAL OF DOCKET NO. GD 410152-RT
Jeffrey Dawson, tenant
and DISTRICT RENT OFFICE
Hudson Associates, owner DOCKET NO. DL 410309-R
ORDER AND OPINION REMANDING PROCEEDING ON APPEAL
On April 17, 1992, both above-named petitioners timely filed Petitions
for Administrative Review against an order issued on March 13, 1992, by
the Rent Administrator, Gertz Plaza, concerning the housing
accommodations known as 104 West 96th Street, New York, New York,
Apartment 8, where the Rent Administrator determined that the owner had
overcharged the tenant.
The Commissioner has reviewed all of the evidence of 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 in December 1989 by the filing
of a rent overcharge complaint by the tenant. The tenant took occupancy
pursuant to a lease commencing February 1, 1989 and expiring January 31,
1991 at a monthly rent of $1,195.00. The tenant also stated that he had
been charged a finder's fee of $1,434.00.
In answer, the owner submitted a rental history and bills and cancelled
checks in the amount of $30,898.00 for new equipment installed in
February and March 1986, immediately prior to the occupancy of the prior
By subsequent correspondence, the tenant submitted a notarized statement
in which he stated that he rented the subject apartment from the
superintendent yet was forced to pay a broker's fee to one Alex
DeFortuna that he paid Mr. De Fortuna at the owner's office; and that he
believed Mr. DeFortuna was employed by the owner and represented the
owner's interests, and was not an outside broker. The tenant also
submitted money orders made out to Mr. De Fortuna and a notarized
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statement from another tenant in the subject building stating that he
had dealt with Mr. Fortuna as the owner's representative. The tenant
also challenged the claimed improvements. The tenant submitted a report
from an engineer hired by the tenant, Mr. Nicholas Bellizzi, who
estimated the allowable cost of the work at $7,900.00 ($8600.00 minus
$700.00 for painting). In addition Mr. Bellizzi claimed that the floors
were only sanded and refinished and were not oak flooring as the owner
claimed; that there were no new kitchen walls and the kitchen
entranceway was not enlarged; that the there were no new closets or new
doors as the owner claimed; and that the kitchen and bathroom work and
electrical work were substantially less than claimed by the owner.
In reply, the owner asserted that Mr. De Fortuna was an indepent real
estate broker who has on several occasions provided his professional
services to the owner. The owner also questioned Mr. Bellizzi's
qualification to estimate the scope of the work performed int he subject
apartment or the value thereof, and noted that Mr. Bellizi's inspection
was performed more than 5 years after the work was done.
In Order Number DL 410309-R, the Rent Administrator determined that the
tenant had been overcharged in the amount of $33,743.96, including
treble damages, and directed the owner to refund such overcharge to the
tenant. The Administrator also determined that the tenant had failed to
prove that a relationship existed between the owner and the broker and
that the evidence did not indicate that the owner and the broker had
acted in collusion to obtain a broker's fee.
In the tenant's petition, the tenant contends that the Administrator
allowed $16,808.00 as accepted costs of new equipment out of the owner's
submission of $30,898.00, but the Administrator never broke down an
itemized list of which improvements were allowed or disallowed. The
tenant asserts that the report of the engineer he employed indicated
substantial discrepancies with the owner's claimed improvements and
estimated an allowable cost of only $7900.00. The tenant also claims
that the Administrator erred in allowing the $15.00 per month
supplementary increase for the prior tenant during Guideline 17 because
the Administrator should have added the new equipment allowance prior to
the supplementary increase, thereby increasing the rent above the
maximum amount allowed to receive the supplementary increase. The
tenant also reasserts that the owner collected an illegal broker's fee
and that the Administrator failed to properly investigate the allegation
made by the tenant that there was a business relationship between the
owner and broker.
In answer to the tenant's petition, the owner again challenged Mr.
Bellizzi's report, asserting that all claimed work had been performed
and documented. The owner also asserted that it was allowed a $15.00
supplemental increase under Guideline 17 and that the Administrator
correctly determined the rent by adding the new equipment allowance
after the rent was calculated.
In the owner's petition, the owner contends in substance that the
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Administrator erred by not granted a sufficient new equipment allowance
based on the work performed and the bills and cancelled checks
submitted. In addition, the owner contended that the Administrator
should not have granted treble damages because even if the Administrator
disallowed some of the new improvements, the owner did not wilfully
overcharge the tenant as it believed it was justified or due to a
hypertechnical computation error.
In answer to the owner's petition, the tenant asserts, in substance,
that the owner has failed to demonstrate that the overcharge was not
willful and that treble damages were warranted.
The Commissioner is of the opinion that this petition should be remanded
to the Rent Administrator for additional processing.
The record in the instant case reveals that the owner submitted
cancelled checks and invoices for considerable work that was allegedly
performed in the subject apartment. Both the owner and tenant have
challenged the amount of increase for improvements allowed by the
Administrator. The tenant raised several issues in a report by Mr.
Bellizzi concerning the claimed improvements which were not addressed by
the Administrator. The Administrator allowed a partial allowance for
some of the work performed, but did not state specifically which bills
were accepted and which bills were rejected (and the reasons therefor).
In addition, the Commissioner finds that, based on the documentation in
the record, additional investigation into the tenant's allegation of an
illegal broker's fee is warranted.
Accordingly, the Commissioner is of the opinion that this proceeding
must be remanded to the Rent Administrator for additional fact finding,
including a physical inspection and/or hearing, if warranted to
determine which new equipment was installed and work was performed in
the subject apartment and the owner's entitlement to a rent increase
based thereon; to determine whether treble damages should be assessed if
there was an overcharge; and to determine whether or not the owner
collected an illegal broker's fee.
The Commissioner further finds that the tenant's argument that the
Administrator erred by granting a $15.00 supplemental increase during
Guideline 17 is incorrect. Guideline 17 permits the $15.00 per month
for base rents of less than $330, not to exceed $342.50 for a two year
vacancy lease. In this case, the Administrator added a guideline and
vacancy increase to the prior rent of $258.00 per month. Since that
resulted in a rent of $294.12, the Administrator was correct in adding
the additional $15.00 per month supplemental increase. The Code
provides that the legal regulated rent may only be increased upon the
execution of leases with tenants. There is no provision in the Rent
Stabilization Law or Code to increase the legal regulated rent of a
vacant apartment. The Guideline do not provide for a rent increase
until a tenant executes a vacancy lease. Since the Guidelines orders
provide that the vacancy rent shall be computed above the rent charged
and paid on the preceding base date and since the Section 2522.4
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allowance was not charged on the base date, the owner is not permitted
to add the allowance to the rent before the guidelines computation.
THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
ORDERED, that this proceeding be remanded to the Rent Administrator for
further processing in accordance with this Order and Opinion. The order
and determination of the Rent Administrator remains in full force and
effect until a new order is issued upon remand. However, if the Rent
Administrator's order retroactively adjusted the rent and directed a
refund of monies between the parties, so much of the Rent
Administrator's order as directed such refund is hereby stayed until a
new order is issued upon remand.
Joseph A. D'Agosta
Acting Deputy Commissioner