GA110121RO; GA110304RT
           
                             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

      ------------------------------------X  SJR 6642
      IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
      APPEALS OF                             DOCKET NO. GA110121RO
                                                        GA110304RT

           133-24 Sanford Ave. Realty,    :  DISTRICT RENT ADMINISTRATOR'S
                                  owner,     DOCKET NO. Q3117892R
                       and
           Frank Watts - tenant,
                                                 

                            PETITIONERS   : 
      ------------------------------------X                             

          ORDER AND OPINION DENYING PETITIONS FOR ADMINISTRATIVE REVIEW
                       AND MODIFYING ADMINISTRATOR'S ORDER

      The above-named owner and tenant filed timely petitions for 
      administrative review of an order issued on December 20, 1991, by a 
      District Rent Administrator concerning the housing accommodations known 
      as 133-24 Sanford Avenue, Flushing, New York, Apartment No. 10L, wherein 
      the Administrator determined that the owner had overcharged the tenant.

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

      This proceeding was commenced by the filing of an overcharge complaint. 
      The Division of Housing and Community Renewal (DHCR) received the 
      overcharge complaint on June 4, 1984.

      The Administrator requested that the owner supply a complete rental 
      history from April 1, 1980.

      In its answer to the complaint the owner alleged, among other things, 
      that the petitioner-owner purchased the property on February 1, 1985 
      while the property was in receivership.  Further, it was alleged that 
      this building was exempted from all local rent regulation by virtue of 
      a Department of Housing and Urban Development (HUD) order giving HUD 
      exclusive jurisdiction over the regulation of rents from November 1, 
      1985 to October 31, 1986.  Also, the owner alleged that it was required 
      to retain records for only four years, and that it received notice of 
      this proceeding in 1987 and a notice requesting a lease history was 
      received in 1989.  Accordingly, the owner asserted that the 
      Administrator could only examine the rental history from 1985.

      The Administrator then sent to the owner a final notice of pending 
      default.  The Administrator in this notice again requested a lease 
      history and requested proof that the owner had initially registered the 
      subject apartment in 1984.

      The owner failed to submit a copy of the base date lease of April 1, 







          GA110121RO; GA110304RT

      1980.

      In the order here under review, the Administrator, based on the owner's 
      failure to provide evidence of initial registration, processed the case 
      as a Tenant's Challenge to the initial registration and found that the 
      owner was required to produce a rental history from April 1, 1980.  The 
      Administrator determined the lawful stabilization rent and overcharges 
      using the court approved default procedure.  Further, the Administrator 
      found that the owner had failed to prove that the overcharge was not 
      willful.  In accordance with Section 2526.1(f)(2) of the Rent 
      Stabilization Code, the Administrator assessed interest on post April 1, 
      1984 overcharges and not treble damages based on the fact that the 
      subject building was purchased by the petitioner owner on February 1, 
      1985 while the building was in receivership.  The subject building 
      became exempt from local rent regulation by virtue of a HUD order for 
      the period from November 1, 1985 to October 31, 1986.  Accordingly, the 
      Administrator computed the overcharges through October 31, 1985 only.
       
      In its petition for administrative review, the owner asserts that the 
      subject apartment was registered and that the tenant did not file a 
      challenge to the initial registration.  Accordingly, the owner maintains 
      that no overcharge occurred.  Further, the owner reasserts the 
      allegations made below.

      In his petition for administrative review, the tenant requests 
      modification of the Administrator's order.  The tenant asserts that the 
      calculations should have begun as of 1982 and not 1983 as stated in the 
      body of the Administrator's order. 

      After careful consideration, the Commissioner is of the opinion that 
      these petitions for administrative review should be denied, but the 
      Administrator's order must be modified.

      The Commissioner finds that the Administrator correctly required the 
      owner to produce rental records from April 1, 1980 and correctly treated 
      the proceeding as a Tenant Challenge to the initial registration.  This 
      procedure was correct even if the subject apartment was duly registered 
      in 1984.  The record indicates that the complaint in this case was 
      received by DHCR on June 4, 1984 and the owner-supplied proof of service 
      of the initial registration shows that the tenant was served on November 
      9, 1984.  Because the complaint was filed prior to the date that the 
      subject apartment was registered, the tenant's complaint was properly 
      treated as a Tenant's Challenge.  Further, the owner is required to 
      retain rent records for four year prior to the filing of the complaint 
      not four years prior to the receipt of the final notice.  Accordingly, 
      the owner's petition for administrative review must be denied.




      With respect to the tenant's petition for administrative review, the 
      Commissioner notes that the body of the Administrator's order did 
      contain a typographical error.  However, the computations accurately 
      reflected the fact that the tenant occupied the subject apartment 
      beginning in 1982 and not in 1983.  Accordingly, the tenant's petition 
      is denied.

      Finally, the Administrator's order requires modification.  The 


          GA110121RO; GA110304RT

      Administrator found that the owner failed to prove that the overcharge 
      was not willful.  In accordance with Section 2526.1(f)(2) of the Rent 
      Stabilization Code, the Administrator assessed interest only and not 
      treble damages because the current owner purchased the property while it 
      was in receivership.  However, this section requires the Administrator 
      to go further; namely, the Administrator is required to allocate 
      overcharges between the current owner and the prior owner and the 
      current owner's liability is limited to the overcharges actually 
      collected by it.

      Accordingly, the petitioner-owner's liability is limited to the 
      overcharges collected between February 1, 1985 through October 31, 1985 
      plus interest on those overcharges and excess security.

      The overcharge attributable to the prior owner and/or the receiver is 
      $5,152.82.  As neither the prior owner nor the receiver was a party to 
      the proceeding before the Administrator or was named in the 
      Administrator's order, no directive to refund any overcharge is included 
      in this order against those parties.  This order is issued without 
      prejudice to the tenant's rights, if any, to proceed against those 
      parties in a court of competent jurisdiction for any overcharge 
      collected by them.  

      The petitioner-owner is liable for total overcharges of $2,027.66 which 
      includes interest and excess security.

      With respect to the overcharge liability of the current owner, 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 these petitions for administrative review be, and the same 
      hereby are, denied, and that the order of the Rent Administrator be, and 
      the same hereby is, modified in accordance with this order and opinion.  
      The amount of the rent overcharge for which the current owner is liable 
      through October 31, 1985 is $2,027.66.

      ISSUED:

                                                                    
                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner





    

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