GD 410056 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 REVIEW
APPEAL OF DOCKET NO.: GD410056RO
1762 - 1764 REALTY ASSOCIATES, DRO DOCKET NO.:AG410409R
TENANT: CINDY FUNK
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
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
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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
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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
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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