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

      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            
                            PETITIONERS   :  c/o Conrad Gutleber


      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 

      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 


      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 

      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 


      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 

      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 


      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

      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.



                                                    JOSEPH A. D'AGOSTA
                                                    Deputy Commissioner


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