GF 410052 RO

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

      APPEAL OF                              DOCKET NO. GF 410052 RO

                                          :  DISTRICT RENT OFFICE
                                             DOCKET NO. EB 410070 R
           Broadway White Realty Co.,       
                                             TENANT: Theresa Haney
                                                     James Adlesic            

                            PETITIONER    : 

                                     IN PART

      On June 10, 1992, the above-named petitioner-owner filed a Petition for 
      Administrative Review against an order issued on May 14, 1992, by the 
      Rent Administrator, 92-31 Union Hall Street, Jamaica, New York, 
      concerning the housing accommodations known as 310 West 14th Street, 
      New York, New York, Apartment No. 5F, wherein the Rent Administrator 
      determined that the owner had overcharged the tenant.

      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 of a rent 
      overcharge complaint by the tenants on February 12, 1990.  The owner was 
      served with a copy of the tenant's complaint and submitted leases and 
      registration statements from February 1, 1983.  The owner stated in 
      substance that the apartment was vacant from May 1, 1984 through June 1, 
      1986; underwent $6,000.00 worth of renovations prior to rental by the 
      prior tenant at $503.10 on June 1, 1986 which is the base date for the 
      subject apartment.  The owner failed to submit bills or cancelled checks 
      for the alleged renovations as directed by the Rent Administrator or 
      even to describe the alleged renovation in any fashion.

      In Order Number ZEB 410070 R, the Rent Administrator established the 
      lawful stabilized rent as $353.10 effective June 1, 1986, determined 
      that the tenants had been overcharged and directed a refund to the 
      tenants of $49,347.34 including treble damages on overcharges collected 
      on and after April 1, 1984.

          GF 410052 RO

      In this petition, the owner contends in substance that the Rent 
      Administrator had used an incorrect base date and rent in its 
      calculations; that the Apartment was vacant on April 1, 1985, therefore 
      the rent of $503.10, as the 1st rent charged and paid after the base 
      date of April 1, 1985 is the correct base date rent; that the Rent 
      Administrator had failed to consider the $6,000.00 worth of renovations 
      included in the $503.10 rent ; that bills were not forthcoming from the 
      prior owner; that the $6,000 was noted on the Rent Stabilization rider 
      to the June 1, 1986 lease; that treble damages are not warranted due to 
      the prior owner's failure to supply bills; that treble damages were not 
      restricted to the 2 year period from the date of filing of the complaint 
      and that the Rent Administrator failed to offset the arrears owed by the 
      tenants who ceased to pay rent in February 1991.

      The owner cited the "Matter of Mittoli", Administrative Review Docket 
      #ARL 10945 K, in support of its contention that the rent of $503.10 
      charged and paid on June 1, 1986 was the correct base rent.

      In answer to the owner's petition, the tenants state in substance that 
      there is no evidence that any renovations were done by the owner prior 
      to their renting the apartment, that the owner's bills should not be 
      accepted on appeal and they are probably fraudulent; that no offset for 
      back rent against the Rent Administrator's order is warranted because 
      the order only calculated the overcharge through the date they ceased to 
      pay the rent due to a breach of the warranty of habitability and that 
      the Rent Administrator used the correct rent and base date in her 

      The Commissioner is of the opinion that this petition should be granted 
      in part.

      Section 2526.1(a)(3)(i) of the Rent Stabilization Code (hereafter RSC) 
      provides in pertinent part that the legal regulated rent for purposes of 
      determining an overcharge shall be deemed to be the rent shown in the 
      annual registration statement filed four years prior to the most recent 
      registration statement plus any subsequent lawful increases and 

      In the instant case, the complaint was filed in February 1990 and 
      therefore the most recent rent annual registration was April 1989.  The 
      annual registration statement filed 4 years prior to April 1989 was 
      correctly cited by the Rent Administrator as April 1985.  

      The Commissioner notes that the owner's reliance upon the Matter of 
      Mittoli is misplaced because the facts in Mittoli involve the 
      establishment of an Initial Legal Registered Rent, the instant case 
      involves the calculation of the legal regulated rent.

      Section 2520.6(f) of the RSC defines the legal regulated rent as the 
      initial legal registered rent (hereafter ILRR) as adjusted in accordance 
      with this code or the rent shown in the annual registration statement 
      filed 4 year prior to the most recent registration statement ...., plus 
      in each case, any subsequent lawful increases and adjustments.

      In the instant case, the rent shown (not "charged and paid," as the 
      owner contends) in the annual registration filed 4 years prior to the 
      most recent registration was the rent of $309.74.

          GF 410052 RO

      Section 2522.1 of the RSC states that legal regulated rents may be 
      increased or decreased only as specified in the code.

      Section 2522 further details the various adjustments permitted to legal 
      regulated rents, among which are increases to reflect Rent Guidelines 
      Board orders for vacancy and renewal leases; fair market adjustment 
      after decontrol; individual apartment improvements/new equipment; 
      building-wide Major Capital Improvements and hardship increases as 
      approved by DHCR.

      The owner has failed to evidence entitlement to any such adjustments 
      above the ILRR of $309.74 to be included in the April 1985 or April 1986 
      annual registration while the subject apartment was vacant.  Therefore, 
      the legal regulated rent for those annual registrations while the 
      apartment was vacant would be the ILRR of $309.74 unadjusted by either 
      guideline or other increases as specified above.

      The Rent Administrator was therefore correct in utilizing the rent of 
      $309.74 as the base rent on the applicable base date of April 1, 1985.

      An examination of the record in this case discloses that during the 
      processing of the case below, the Rent Administrator directed the owner 
      on two separate occasions to submit bills and cancelled checks to 
      substantiate claimed improvements made in the subject apartment.  
      However, the owner has failed to substantiate either below or on appeal 
      entitlement to an increase to the prior tenant's rent commencing June 1, 
      1986 for alleged renovations in the amount of $6,000.00 and therefore 
      the Rent Administrator was precluded from considering such improvements 
      in the computation of the legal regulated rent.

      A review of the leases in the file reveals that the Rent Administrator 
      correctly computed the complainants' vacancy lease commencing February 
      1, 1987 above the legal regulated rent established for the prior 
      tenant's lease.

      With regard to the owner's contention that the imposition of treble 
      damages was not warranted, Section 2526.1 of the Rent Stabilization Code 
      provides in pertinent part that any owner who is found by the DHCR to 
      have collected a rent or other consideration in excess of the legal 
      regulated rent on and after April 1, 1984 shall be ordered to pay to the 
      tenant a penalty equal to three times the amount of such excess.  If the 
      owner establishes by a preponderance of the evidence that the overcharge 
      was not willful, the DHCR shall establish the penalty as the amount of 
      the overcharge plus interest from the date of the first overcharge on or 
      after April 1, 1984.

      In the instant case, the owner has not submitted sufficient evidence to 
      substantiate its claim that the overcharge was not willful in that it 
      has not established that any improvements were actually made in the 
      subject apartment.

      Further, the Rent Administrator computed the overcharge and correctly 
      imposed treble damages from February 1988 which commenced the 2 year 
      limitation period for the instant complaint filed in February 1990.  
      Prior to February 1988, the Rent Administrator assessed interest in 
      accordance with Chapter 403.

          GF 410052 RO

      However, the Commissioner determines that the owner is correct in its 
      contention that the arrears for non-payment of rent from March 1, 1991 
      through the date of the order should be offset against, the total 
      overcharge, therefore, the Administrator's order must be updated to 
      include the 15 month period, which was prior to the Administrator's 
      order, where both parties acknowledge no rent payments occurred.  The 
      Administrator determined that the lawful stabilization rent for this 
      period should have been $448.89.  Accordingly, the overcharge 
      determination is reduced by $6,733.35 ($448.89 x 15 = $6,733.35) 
      resulting in a total overcharge of $42,613.99.

      Accordingly, the Rent Administrator's order was warranted.

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

      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 this petition be, and the same hereby is, granted in part, 
      and, that the order of the Administrator be, and the same hereby is, 
      modified in accordance with this order and opinion.  The amount of the 
      rent overcharge, offset by arrears owed from March 1, 1991 through May 
      14, 1992, is $42,613.99. 


                                      JOSEPH A. D'AGOSTA
                                      Acting Deputy Commissioner

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