GD 410056 RO
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          APPEAL OF                              DOCKET NO.: GD410056RO
            1762 - 1764 REALTY ASSOCIATES,       DRO  DOCKET  NO.:AG410409R

                                                 TENANT:     CINDY     FUNK
                                   PETITIONER :   


          On April 2, 1992, the above-named petitioner-owner filed a Petition 
          for Administrative Review against an order issued on February 28,
          1992,  by  a   Rent   Administrator,   concerning   the   housing
          accommodations known as 1762 First Avenue, New  York,  New  York,
          Apartment No. 11, wherein the Rent Administrator determined  that
          the owner had overcharged the tenant.

          On August 25, 1992,  the  petition  was  dismissed  as  untimely.
          Subsequently, on September 14, 1992, pursuant to the petitioner's
          request for reconsideration, the Commissioner determined to accept 
          the owner's petition for administrative review of the  underlying
          overcharge proceeding as timely.

          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

          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 on July 18, 
          1986 of a rent overcharge complaint by the tenant.

          The tenant had assumed occupancy on September 1, 1983 pursuant to
          a one year lease at a rent of $700.00 per month.

          In Order Number AG 410409 R, the Rent Administrator determined that 
          due to the owner's failure to submit a complete rental history, the 
          tenant had been overcharged in the amount of $4,013.56  including
          treble damages, interest and excess security and directed the owner 
          to refund such overcharge to the tenant as well as to reduce  the

          GD 410056 RO

          In  its  petition,  the   current   owner   contends   that   the
          Administrator's order was improper because the owner was never sent 
          the tenant's complaint and never knew of the overcharge proceeding 
          until it received a copy of the order.  Since the owner was never
          afforded an opportunity to interpose an answer or to provide  any
          documentation  required  by  the  Division   before   the   final
          determination, the owner submits that the order was arbitrary and
          capricious, and an abuse of discretion.  The owner further contends 
          that it purchased the building in 1986, and received  no  records
          from the prior owner other than the then current rent roll;  that
          the petitioner never entered into any lease with the tenant and is 
          therefore exempt from any overcharge claim by the tenant, and, by
          extension, from the treble damages penalty as well; and that  the
          imposition of treble damages was also improper because the tenant's 
          complaint was really in the nature of a fair market rent  appeal,
          for which treble damages cannot be imposed, and because the owner
          received no notice informing it of the treble damages penalty  or
          affording it an opportunity to prove that any overcharges were not 
          willful; and that the apartment was renovated with new equipment.

          The owner was served with the complaint on October 23, 1992 and, in 
          a separate notice on November 3, 1992, with  the  treble  damages
          notice.  In its response, dated November 10, 1992, the owner stated 
          that the tenant's appeal was untimely because the tenant offered no 
          proof that it was not properly served with the initial registration 
          in 1984.  The owner also claims that case law supports the current 
          owner's immunity from liability for damages he could not have been 
          aware of, and treble damages are thus inappropriate.

          Communications to the tenant at her last known address received no 

          The Commissioner is of the considered opinion that this  petition
          should be denied.

          The record in this case establishes that, upon failing to receive
          an answer to the tenant's complaint from  the  owner  within  the
          period designated under the Code, the Administrator determined the 
          lawful rent  in  accordance  with  standard  default  procedures.
          Although the current owner  correctly  notes  that  it  had  been
          deprived of the opportunity to submit the documentation required by 
          the DHCR because it was never notified of the proceeding prior to
          the determination, the petitioner is not correct in contending that 
          the Administrator's determination must be revoked because of this. 
          In prior cases where the petitioners failed to receive notice, the 
          Commissioner has been willing to accept the requisite rent history 
          for the first time on appeal, a variance from the rule barring such 
          acceptance which is specifically limited to these  circumstances.
          However, where the petitioner fails to cite any reason to believe
          that the Administrator's determination would have been different if 
          notice had been served and still fails to submit the rent history, 
          then the Commissioner will review the record as it  stands.   The
          appropriateness of this position is demonstrated by the history of 

          this proceeding on appeal.  After the owner was sent a copy of the 
          complaint on October 23, 1992, and given 20 days to  respond,  it

          GD 410056 RO

          requested an extension until December 15, 1992 "in order to obtain 
          necessary records and documents to adequately respond."  The owner 
          did not meet its own deadline,  however,  and  to  date  has  not
          submitted such records.  The record  is  the  same  as  what  the
          Administrator had seen, containing only the rent  roll  that  the
          petitioner received from the prior owner.  Thus,  the  record  on
          appeal sustains the Administrator's determination of  the  lawful
          rent in default and of the assessment of actual overcharges.

          Section 26-516 of the Rent Stabilization Law  provides  that  any
          owner who is found by the DHCR to have  collected  an  overcharge
          shall be liable to the tenant for treble damages unless the owner
          establishes by a preponderance of the evidence that the overcharge 
          was not willful, in which case interest shall be imposed.  Section 
          26-516 also provides that treble damages shall be applied only to
          overcharges occurring on or after April 1, 1984.

          In the instant case the owner was given additional opportunities on 
          appeal to respond to the complaint, and to rebut the presumption of 
          willfulness and thereby prevent treble damages, but offers nothing 
          of substance.  Overcharges were determinined based on  the  total
          lack of a rent history for the apartment.  The owner's contention
          that it cannot be accused of a willful overcharge because it never 
          actually signed a lease with the tenant is  without  merit.   The
          overcharge was already set in place when the current owner bought
          the building; to continue to collect it was  willful  in  itself.
          Therefore the treble damages are sustained.

          Although DHCR records indicate that the owner did file the initial 
          registration with DHCR in 1984, the owner  submits  no  proof  of
          service of the registration on the  tenant.   The  tenant  denied
          receiving it in the complaint.  Therefore, the tenant's objection
          to the initial rent is still timely.

          Section 2526.1(f) of the  Rent  Stabilization  Code  provides  in
          pertinent part that for overcharges collected prior to  April  1,
          1984, an owner will be held responsible only for his or her portion 
          of the overcharge, in the absence of collusion or any relationship 
          between such owner and any prior owners, and that for  overcharge
          complaints filed or overcharges collected on or  after  April  1,
          1984, a current owner shall be  responsible  for  all  overcharge
          penalties, including penalties collected by any prior owner.  

          In the instant case, the complaint was filed after April 1, 1984,
          making  the  current  owner  fully  liable  for  all  overcharges
          determined in this proceeding.

          A copy of this order and opinion is being  sent  to  the  current
          occupant of the subject premises.

          The owner is directed to reflect the findings and  determinations
          made in this order on all future registration statements, including 

          GD 410056 RO

          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.

          The Commissioner has determined in this Order and Opinion that the 
          owner collected overcharges of $4,013.56.  This Order  may,  upon
          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, at which time 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

          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, denied, that the order of the Rent  Administrator
          be, and the same hereby is, affirmed.      

                                          JOSEPH A. D'AGOSTA
                                          Deputy Commissioner


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