GB 410308 RO
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                              JAMAICA, NEW YORK   11433

          APPEAL OF                               DOCKET NO.: GB 410308 RO

                  APAR REALTY COMPANY,
                                                  DRO DOCKET NO.: TC 085101 G
                                                  TENANT:  GERALDINE JENDER



          The above-named petitioner-owner  timely  filed  a  Petition  for
          Administrative Review against an order  issued  on  November  15,
          1989 by the Rent Administrator, 92-31 Union Hall Street, Jamaica, 
          New York concerning the housing accommodation known as  643  West
          207 Street, Apartment 5A, New York, New  York  wherein  the  Rent
          Administrator determined that the tenant had been overcharged.

          The Commissioner notes that this proceeding was  filed  prior  to
          April 1, 1984.  Sections 2526.1(a)(4) and 2521.1(d) of  the  Rent
          Stabilization  Code  (effective  May  1,  1987)  governing   rent
          overcharge  and  fair  market  rent  proceedings   provide   that
          determination of these matters be based  upon  the  law  or  code
          provisions in  effect  on  March  31,  1984.   Therefore,  unless
          otherwise  indicated,  reference  to   Sections   of   the   Rent
          Stabilization Code (Code) contained herein are  to  the  Code  in
          effect on April 30, 1987.

          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 appeal.

          This proceeding was originally commenced by the filing of a  Fair
          Market Rent  Appeal  on  January  12,  1983  which,  because  the
          Division's records indicated that the subject apartment had  been
          vacancy decontrolled on October 3,  1973,  was  converted  to  an
          overcharge complaint in July 1984  and  re-docketed  as  such  in
          July 1985.

          In response to the complaint, the owner asserted  that  since  it
          had rehabilitated the subject building with the aid of  financing
          by the Community Preservation Corporation,  it  was  entitled  to
          charge a free market rent.

          The record discloses that the owner was requested to submit

                1) leases  for  the  period  October  3,  1973  through
               October 31, 1982,

          GB 410308 RO

                2) a copy of CDR # 5865, on order which had granted a  rent
                   increase for Major Capital Improvements (MCI) and

                3) the specific renovation cost for the subject apartment. 

          The owner was advised in  a  notice  dated  July  14,  1986  that
          failure to submit a full  rental  history  would  result  in  the
          establishment of the lawful rent by use of default procedures and 
          was also advised that treble damages could be imposed.

          In response to the complaint, the owner submitted  a  copy  of  a
          loan commitment from the New  York  City  Community  Preservation
          Corporation (CPC), a private bank which  provided  rehabilitation
          financing in targeted neighborhoods, and a  copy  of  a  proposed
          contract to rehabilitate the subject property to substantiate its 
          entitlement to a free market rent.

          In the order here under review, the Administrator established the 
          lawful stabilization rent at $223.85 for November 1, 1982 through 
          October 31, 1983 and directed the owner to refund overcharges  of
          $13,994.57 inclusive of excess security and treble damages on the 
          overcharges collected on and after April 1, 1984.

          In the appeal, the owner requests that the Administrator's  order
          be reversed.  The owner contends:

               1)   that it was not informed that  the  matter  was
                    not being  processed  as  a  Fair  Market  Rent
                    Appeal  or  that  it  was  required  to  submit
                    prior rent history documentation;

               2)   there is no basis for imposing  treble  damages
                    because treble damages  o  not  lie  for   pre-
                    April  1,  1984  complaints  unless  there  has
                    been   express   notification    of    possible
                    liability.  Moreover, there was no  attempt  to
                    willfully  overcharge  as  the  rent  reflected
                    the owner's understanding of the terms  of  its

               3)   the  Administrator  should  have  searched  the
                    CAB's record to determine if  that  agency  had
                    made a rent adjustment pursuant  to  the  terms
                    of the CPC loan agreement; and

               4)   the Administrator failed to  credit  the  owner
                    with the granted MCI increase.

          The Commissioner is of the opinion that this petition  should  be

          Review of the record reveals that the owner was kept apprised  of
          the ongoing processing of the tenant's complaint.   Although  the
          record indicates that a FMRA-related notice was incorrectly  sent
          to the owner in September 1989,  the  owner  was  not  prejudiced
          thereby.  The owner had been notified of the conversi n  and  re-
          docketing of the Fair Market Rent Appeal (FMRA) to an  overcharge
          proceeding and was given ample opportunity  to  submit  a  rental

          GB 410308 RO
          history.  The  record  indicates  that  the  owner  responded  to
          various notices and requested more time in which  to  submit  the
          rental history.  The owner was advised  that  failure  to  do  so
          would result in the establishment of the rent using  Section  42A
          default  procedures  and  that  treble  damages  for  overcharges
          occurring on and after April 1, 1984  would  be  imposed  if  the
          owner could not establish that such overcharges were not willful. 
          Accordingly, the Commissioner finds that  the  Administrator  did
          not err in establishing the lawful stabilization rent.

          With  respect  to  treble  damages  the  Rent  Stabilization  Law
          provides for the imposition of a penalty of  treble  damages  for
          all willful overcharges collected on or after April 1, 1984.  The 
          law creates a presumption of willfulness that is overcome by  the
          owner's  affirmative  showing  of  lack  of  willfulness   by   a
          preponderance of the evidence.  The owner herein failed  to  meet
          its burden.  Since the owner had been  advised  of  the  possible
          imposition of the treble damages penalty, the  Administrator  was
          correct in assessing the penalty.

          With regard to the  Division's  responsibility  to  search  CAB's
          records, the Commissioner notes that the Rent  Stabilization  Law
          gives an owner the responsibility of maintaining  rental  records
          and of producing them upon  request.   In  view  of  the  owner's
          failure to submit requested documents, the Division attempted  to
          learn the  basis  of  the  rent  collected  by  the  owner,  even
          directing an inquiry to the "CPC" to determine whether the  owner
          had  complied  with  the  general  conditions  of  the   mortgage
          commitment,  in  particular,  paragraph  1,  clause  IV  (4)  and
          paragraph  5,   clause   VII,   which   specified   the   owner's
          responsibility in the structuring of the appropriate legal  rent,
          including applying for approval  and  setting  of  the  allowable
          monthly rent increase.  The record contains no  response  to  the
          inquiry.  Further an examination of DHCR and CAB records did  not
          disclose any application  by  the  owner  with  the  CAB  for  an
          adjustment of the stabilized rents pursuant to the terms  of  the
          CPC loan agreement.

          In conformance  with  the  application  of  Section  42A  default
          procedures to establish the rent, the rent is  "frozen",  barring
          all rent increases for the period covered by the  Administrator's
          order.  Accordingly, the Administrator did not err  in  excluding
          the MCI rent increase.

          Because this determination concerns  lawful  rents  only  through
          October 31, 1986, the owner is  cautioned  to  adjust  subsequent
          rents to an amount no greater than that determined  by  the  Rent
          Administrator's order plus any lawful  increases,  including  the
          MCI rent increase.

          This order may, upon the expiration of the period  in  which  the
          owner may institute a proceedi g  pursuant  to  Article  Seventy-
          Eight of the Civil Practice Law and Rules, be filed and  enforced
          in the same manner as a judgment.

          THEREFORE,  in  accordance  with  the  provisions  of  the   Rent
          Stabilization Law and Code, it is

          ORDERED, that this petition be, and the same hereby  is,  denied,

          GB 410308 RO
          and that the order of the Rent Administrator  be,  and  the  same
          hereby is, affirmed.


                                                  JOSEPH A. D'AGOSTA
                                                  Acting Deputy Commissioner

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