HB110011.RT
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
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEALS OF DOCKET NOS:HB110011RT
Roselle Staab, Tenant, HB110144RO
and Park Lane Mgmt. : DISTRICT RENT OFFICE
Corp., Owner, DOCKET NO.ZBF110099R
PRIOR OWNER:Park Lane
Apts.,Inc.,
PETITIONERS : c/o Conrad Gutleber
------------------------------------X
ORDER AND OPINION DENYING PETITIONS FOR ADMINISTRATIVE REVIEW
On February 12 and February 26, 1993 the above-named petitioners filed
Petitions for Administrative Review against an order issued on January
22, 1993 by the Rent Administrator, 92-31 Union Hall Street, Jamaica,
New York concerning housing accommodations known as Apartment D3 at 116-
40 Park Lane South, Richmond Hill, New York wherein the Rent
Administrator determined that the owner had collected excess rent from
the tenant.
The issue in these appeals is whether the Rent Administrator's order was
warranted.
The applicable sections of the Law are Sections 26-513 and 26-516 of the
Rent Stabilization Law and Sections 2522.3, 2526.1(a) and 2526.1(g) of
the Rent Stabilization Code.
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 appeals.
This proceeding was originally commenced by the filing in June, 1987 of
a rent overcharge complaint by the tenant, in which she stated that she
had commenced occupancy in July, 1985 at a rent of $400.00 per month.
While it is not clear from the record whether the prior owner was served
with the tenant's complaint, the current owner was served on February
14, 1990. During the course of the proceeding it become apparent that
the complainant was actually the first stabilized tenant, and that her
complaint was therefore a fair market rent appeal.
On May 27, 1992 the owner was sent forms to use in answering the fair
market rent appeal. Schedule 3 of the forms stated that receipts and
cancelled checks should be submitted to substantiate new equipment or
special improvements. Schedule 1 offered an opportunity to submit
comparability data. On June 17, 1992 the owner was sent a "Summary
HB110011.RT
Notice" which proposed to base the fair market rent on the 1984 Maximum
Rent of $200.96 as increased by the appropriate Special Fair Market
Guidelines order.
In an order issued on January 22, 1993 the Rent Administrator
established a fair market rent of $231.10 by increasing the 1984 Maximum
Rent by the applicable 15% increase under Special Guidelines Order No.
16, and found that excess rent of $16,162.35 had been collected from
July 1, 1985 through January 31, 1993. The order directed the prior and
current owners to refund the excess rent collected during the time that
each owned the building.
In her petition (Docket No. HB110011-RT), the tenant contends in
substance that the prior owner, Conrad Gutleber, holds a mortgage on the
building; that the current owner retains as counsel the prior owner's
son; that the prior owner therefore has a vested interest in the current
owner's corporation; that treble damages should be imposed as a result;
that the prior, rent controlled tenant was paying $94.66, not $200.96;
that interest should be imposed on the excess rent collected; that she
never received an initial registration form; that the order did not
address the issue of excess security; and that the owner has failed to
paint the apartment.
In answer, the owner asserts in substance that neither Conrad Gutleber
nor his son have any interest in the building other than a second
mortgage held by Conrad Gutleber, and that Stephen Gutleber has never
been the owner's attorney.
In its petition (Docket No. BH110144-RO) the owner contends in substance
that the tenant's rent was based on repairs done to the apartment before
it bought the building. With its petition the owner has enclosed
invoices for a stove, a refrigerator, and about $250.00 in materials and
supplies, as well as a recent letter to it from attorney Stephen
Gutleber, in which Mr. Gutleber states that Conrad Gutleber never knew
of the tenant's complaint until very recently; that Conrad Gutleber
moved out of 96-21 Rockaway Boulevard in 1986; that many additional
records had been discarded during the following seven years; and that
Conrad Gutleber would have been able to substantiate the lawfulness of
the tenant's rent if he had been given timely notice of her complaint.
In answer, the tenant asserts in substance that the receipts are dated
prior to her occupancy; that essential and required services do not
merit any rent increases; that she did not ask that anything be done in
her apartment; that the order did not address the issue of excess
security; and that she did not not receive any rent stabilization riders
or even an initial rent registration form.
The Commissioner is of the opinion that these petitions should be
denied.
Section 2526.1 of the Rent Stabilization Code provides that any owner
found to have willfully collected an overcharge above the authorized
rent shall be liable for a penalty equal to three times the amount of
such overcharge and may be assessed the reasonable costs and attorney's
HB110011.RT
fees of the proceeding on any overcharge which occurs after April 1,
1984. If the overcharge is found not to be willful, interest is imposed
rather than treble damages. This section applies to violations of the
Rent Stabilization Law and and Rent Guidelines Board orders and does not
apply to fair market rent appeals. Pursuant to Section 26-512(b) (2)
of the Rent Stabilization Law, for apartments which are removed from
rent control and become subject to the Rent Stabilization Law, by virtue
of a vacancy occurring after June 30, 1974, the owner is permitted to
charge an initial fair market rent as "agreed to by the landlord and the
tenant," subject to the tenant's right to challenge the initial rent as
exceeding the fair market rent. If the tenant does not challenge the
initial rent, it becomes the legal base rent. If the tenant challenges
the initial rent, a determination may be made that the tenant's initial
rent exceeds the proper fair market rent for the apartment. In such
case, the owner is required to give the tenant a refund or credit for
the amount collected in excess of the fair market rent. However, such
determination that the initial rent exceeds the fair market rent is
considered in the nature of a rent adjustment rather than a rent
overcharge and thus the imposition of treble damages or interest and
attorney's fees is not warranted. It is noted that rent overcharge
proceedings where treble damages may be imposed generally involve cases
where an initial legal regulated rent (fair market rent) is already
established and an owner willfully charges rents higher than permitted
by the Guidelines Board upon subsequent renewal leases or refuses to
submit a complete rental history thus leading to the conclusion that
rent overcharges occurred. In addition, Section 2526.1(g) of the Rent
Stabilization Code provides that "[t]he provisions of this section
[Section 2526.1, concerning overcharge penalties and assessment of costs
and attorney's fees] shall not apply to a proceeding pursuant to Section
2522.3 of this Title (Fair Market Rent Appeal)."
While the prior, rent controlled tenant may have been paying a rent of
$94.66, Special Fair Market Rent Guidelines Order No. 16 provided that
the fair market rent be calculated above the 1984-85 Maximum Base Rent,
which in this case was $200.96, rather than the Maximum Collectible
Rent- the actual rent charged the rent controlled tenant. While the
tenant may be correct that she was not given any registration for the
prior tenant, that was already taken into account, since the fact that
there was no evidence that she had been served with a Notice of Initial
Legal Regulated Rent or Notice of Statutory Decontrol was the factor
that enabled her complaint to be treated as a fair market rent appeal
even though she did not file it until two years after she commenced
occupancy. DHCR rent registration records disclose that the subject
apartment was registered in 1984 as required as a rent controlled
apartment.
The owner has now for the first time submitted invoices. On May 27,
1992 the owner was given an opportunity to document the installation of
new equipment and improvements, but failed to do so. It is well-settled
that, absent good cause being shown, an Administrative Review is not a
de novo proceeding but is limited to the issues and evidence which were
before the Administrator. The owner has offered no justification for
the late submission of the invoices. They are accordingly not accepted
HB110011.RT
for the first time on appeal. While Stephen Gutleber, attorney for the
prior owner, contended in his letter to the owner that if his clients
had been given timely notice of a proceeding they would not have
discarded records of improvements and new equipment, this does not
excuse the owner. An owner buying a building with rent-regulated
apartments is obligated to charge only lawful rents, and to be able to
prove their lawfulness to the DHCR on demand. It appears that the owner
did not request rent records from the prior owner until 1993, in the
context of this appeal proceeding, although even the records that are
now submitted would presumably have been available from Stephen Gutleber
at the time of the Administrator's request of May 27, 1992.
Regarding the tenant's contention that the order did not address the
issue of excess security, the Commissioner notes that the order lists
excess rent of $15,968.10 and excess security deposit of $194.25, for a
total refund due of $16,162.35.
The owner is directed to reflect the findings and determinations made in
the Administrator's order on all future registration statements,
including those for the current year if not already filed, citing the
Administrator's 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 the Administrator's order. The
owner is further directed to adjust subsequent rents to an amount no
greater than that determined by the Rent Administrator's order plus any
lawful increases.
Because of a statement in the tenant's petition that suggests that the
owner may not have reduced the rent after the Administrator's order, the
Commissioner notes that, pursuant to Section 2529.12 of the Rent
Stabilization Code, the filing of a Petition for Administrative Review
did not effect a stay of the directive to reduce the rent to $302.64,
although it did stay the directive to make a refund of the past excess
rent collected. Regarding the tenant's contention that she has had to
pay $1,120.00 to paint her apartment since neither the prior nor current
owners have ever painted it, that contention may not be considered when
raised for the first time on appeal. This order is issued without
prejudice to the the tenant's right to file a complaint alleging a
service decrease and requesting a rent reduction, if warranted.
THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
warranted.
ORDERED, that these petitions be, and the same hereby are, denied and
that the Rent Administrator's order be, and the same hereby is,
affirmed. The lawful stabilization rent is $302.64 per month in the
lease commencing February 1, 1992.
HB110011.RT
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
|
